Creative Destruction and Subjective Well-Being
AbstractIn this paper we analyze the relationship between turnover-driven growth and subjective well-being. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not; (ii) job creation has a positive and job destruction has a negative impact on well-being; (iii) job destruction has a less negative impact in areas with more generous unemployment insurance policies; and (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross sectional MSA (metropolitan statistical area)-level and individual-level data provide empirical support to these predictions.
CitationAghion, Philippe, Ufuk Akcigit, Angus Deaton, and Alexandra Roulet. 2016. "Creative Destruction and Subjective Well-Being." American Economic Review, 106 (12): 3869-97. DOI: 10.1257/aer.20150338
- I31 General Welfare; Well-Being
- J63 Labor Turnover; Vacancies; Layoffs
- J65 Unemployment Insurance; Severance Pay; Plant Closings
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O38 Technological Change: Government Policy