Is Any Job Better than No Job? Life Satisfaction and Re-employment

Using data for West Germany from the German Socio-Economic Panel, we analyse the impact of transitions from unemployment to full-time employment on life satisfaction, with special focus on the influence of job quality. We apply various indicators of job quality (self-reported job satisfaction, wages, type of contract, and indicators of the fit between the worker and job requirements). We control for the influence of income changes and other factors affecting life satisfaction, using a conditional logit estimator. Results suggest that job quality only matters to some extent, and often people in bad jobs are still better off than those who remain unemployed. This effect is statistically significant for most indicators of job quality, except for workers with low job satisfaction and for those whose new job is much worse than their pre-unemployment job.