Institutions, Labor Market Insecurity, and Well-Being in Europe

Abstract

We examined the differences among seventeen European countries regarding the extent to which several key institutional and labor market characteristics affect the degrees of insecurity that people feel about their jobs and employment prospects, as well as their well-being (economic security and subjective well-being). We estimate how macrostructural factors affect well-being by fitting random-intercept multi-level models and decomposing the variance across national and individual levels, using data from the 2004 and 2010 European Social Surveys. We find that there is substantial country-level variation in labor market insecurity, economic security and subjective well-being. Active labor market policies, the generosity of unemployment benefits, and collective bargaining coverage explain a considerable portion of the identified differences among countries in labor market insecurity and well-being. The effects of employment protection legislation vary depending on whether the worker has a permanent or temporary contract. We did not find substantial differences between 2004 and 2010, suggesting that the effects of institutions and worker power on labor market insecurity and well-being reflect longer-term structural changes associated with the transformation of employment relations.