Stayin' Alive: Unemployment and Life Satisfaction during Times of Economic Prosperity and Crisis in Catalonia, Spain

Abstract Unemployment is known to be one of the most negative determinants of subjective well-being. Nonetheless, more evidence is needed to understand how the relationship between individual unemployment and cognitive well-being unfolds during divergent macroeconomic contexts as well as the moderating role of social origin. Furthermore, more panel evidence is needed to account for unobserved fixed heterogeneity. This article addresses these gaps by exploring how individual unemployment relates with life satisfaction during periods of economic prosperity and crisis, using panel data from Catalonia, Spain (2001–2012). Catalonia suffered a dramatic increase in inequality and unemployment during the 2008 Economic Crisis. The findings confirm that unemployment matters for life satisfaction. However, the study demonstrates that, compared to employed individuals, individual unemployment positively relates with life satisfaction during the macroeconomic crisis, particularly among high social origin individuals. Overall, the article shows that there is no subjective well-being penalty for those unemployed during the crisis and offers several potential explanations for these findings.