Creative Destruction and Subjective Well-Being
Philippe Aghion, Ufuk Akcigit, Angus Deaton, Alexandra Roulet
American Economic Review · 2016 · Volume 106 · Issue 12
Abstract
In 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.
Keywords
General Welfare, Well-Being, Labor Turnover, Vacancies, Layoffs, Unemployment Insurance, Severance Pay, Plant Closings, Technological Change: Choices and Consequences, Diffusion Processes, Technological Change: Government Policy
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