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More Education Does Make You Happier – Unless You Are Unemployed

SOEPpapers 1192, 40 S. : Anh.

Alexander Bertermann, Daniel A. Kamhöfer, Hannah Schildberg-Hörisch


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This paper investigates the causal effect of education on life satisfaction, exploring effect heterogeneity along employment status. We use exogenous variation in compulsory schooling requirements and the build-up of new, academically more demanding schools, shifting educational attainment along the entire distribution of schooling. Leveraging plant closures and longitudinal information, we also address the endogeneity of employment status. We find a positive effect of education on life satisfaction for employed individuals, but a negative one for those without a job. We propose an aspiration-augmented utility function as a unifying explanation for the asymmetric effect of education on life satisfaction.

JEL-Classification: I26;I31;C26
Keywords: Education, Life satisfaction, Employment status, Compulsory schooling reforms, School openings, Instrumental variable estimation
Frei zugängliche Version: (econstor)