The Happiness of Young Australians: Empirical Evidence on the Role of Labour Market Experience

Abstract

Data from the Longitudinal Surveys of Australian Youth are used to investigate factors that influence young Australians’ self-reported levels of ‘happiness’ during the school-to-work transition, focusing on the role of labour market experience. Panel logit models are fitted to control for individual effects. Fixed individual personality traits and marital status strongly influence reported happiness. There is evidence of declining wellbeing with duration of unemployment and of the importance of job quality, rather than just having a job. The validity of Clark and Oswald’s (1994) assertion that empirical findings from happiness research show that unemployment is involuntary is questioned. I Introduction Following work by Easterlin (1974), there has been a burgeoning number of papers within the economics literature analysing the factors that affect ‘subjective well-being’, and particularly the relationship between income or economic growth and well-being. The present paper investigates the factors that influence young Australians’ levels of happiness with their lives, with an emphasis upon the role of their early labour market experiences. Data are used from the 1995 Year 9 cohort of the Longitudinal Surveys of Australian Youth (LSAY) in which respondents were asked to rate their happiness on a four-point scale in the surveys from 1997 to 2002. These years correspond to the cohort’s final 2 years of high school and their entry into post-secondary education or training and the labour force. The main focus is upon the effect of time in unemployment and various aspects of a person’s working life on their overall happiness. Clark and