Publication Type
Journal Article
Version
submittedVersion
Publication Date
5-2025
Abstract
Using 20 years of nationally representative panel data in South Korea, we estimate how life satisfaction responds to income shocks. We document that unexpected income changes significantly impact an individual's life satisfaction, and the magnitudes depend on the persistence of income shocks. We find that permanent income shocks substantially penetrate life satisfaction, while transitory income shocks have minimal impact. We also find that life satisfaction regarding external factors such as family income and leisure activities is more sensitive to income shocks than life satisfaction related to social relationships. Our findings imply that it is critical for the government to address persistent income losses in the economy (e.g., long-term unemployment driven by skill-biased technological changes or work-limiting disability) as a means to improving social welfare.
Keywords
Income shocks, insurance, KLIPS, life satisfaction, subjective well-being
Discipline
Asian Studies | Behavioral Economics | Income Distribution
Research Areas
Applied Microeconomics
Publication
The Review of Income and Wealth
Volume
71
Issue
2
First Page
1
Last Page
16
ISSN
0034-6586
Identifier
10.1111/roiw.70018
Publisher
Wiley
Citation
AN, Jiyeon; AHN, Taehyun; and KIM.
Is subjective well-being insured against income shocks? Evidence from 20-year panel data in South Korea. (2025). The Review of Income and Wealth. 71, (2), 1-16.
Available at: https://ink.library.smu.edu.sg/soe_research/2809
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/roiw.70018