Employment Status, Income and the Subjective Well-Being of Immigrants

Carsten Pohl, IFO Institute for Economic Research, Dresden Branch

Migration theory suggests that individuals are leaving their country of origin due to the existence of an income differential between the home and host economy. However, although the income situation abroad may improve, the question of life satisfaction in the host country arises. In this context, I study the subjective well-being of the foreign-born using data from the German Socio-Economic Panel (1984-2005). Appyling (generalized) ordered logit models it is shown to what extent the immmigrants' life satisfaction is associated with their income situation as well as their employment status. Controlling for socio-economic characteristics, income has only a small, positive impact on subjective well-being. However, the empirical findings provide evidence that the employment status determines subjective well-being to a large extent. Immigrants who are unemployed exhibit a significantly lower level of life satisfaction than employed immigrants.