Can workfare programs offset the negative effect of unemployment on subjective well-being?

Research output: Contribution to journalArticle


Previous research suggests that unemployment negatively affects indicators of mental health and well-being, but it remains unclear whether active labor market policy can offset this effect. This paper examines a workfare program that was a key part of Germany's active labor market policy for over 30 years. Fixed effects panel estimates suggest that participation in the workfare program offset most, though not all, of the negative effect of unemployment on subjective life satisfaction. Robustness tests find no evidence that this estimate is due to non-parallel time-trends, unobserved shocks in the pre-treatment period, adaptation to unemployment or differences in regional unemployment rates. These results suggest that active labor market policies can help reduce the negative psychological effect of unemployment.

Original languageEnglish (US)
Pages (from-to)42-47
Number of pages6
JournalEconomics Letters
StatePublished - Mar 1 2016



  • Active labor market policy
  • Life satisfaction
  • Unemployment
  • Well-being
  • Workfare

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this