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In this paper, we provide novel evidence on the effect of local unemployment rate on life satisfaction. With this, we contribute to the expanding literature that aims to understand the role of the local labor market's conditions for individual well‐being. This information can be used to only analyze the impact of regional economic policies, as well as to understand individuals' behavior and reactions to policy changes. In concrete, we investigate how changes in local unemployment rate affect subjective well‐being in Germany, allowing for the presence of spatial spillovers and considering the role played by regional borders. The results indicate that higher unemployment in the own local area of residence has a negative effect on satisfaction. Similarly, individuals' happiness negatively correlates with the unemployment rate in contiguous local areas, but only if these areas are located in the same Federal State as the one where the individual lives. Heterogeneity analysis reveals that these negative effects of local unemployment rate are larger for individuals with stronger ties to the job market and less secure jobs. [ABSTRACT FROM AUTHOR]

In the wake of Esping-Andersen's and Pierson's landmark publications, comparative welfare state research has revolved around the retrenchment of social policy and the transformation of welfare state regimes. One of the chief problems of these studies is the treatment of time. Very often, changes are incremental and their real impacts are not immediately visible but take years or even decades before the consequences fully materialize. The purpose of this paper is to discuss those incremental processes—that consist of series of smaller “not-system-shifting changes”—which may gradually change central features of a welfare state. Pension programmes, spanning long time periods, provide a good example. Only in some rare cases were pension schemes reformed in one step and in such a way that one can definitely ascertain a system shift. Most changes, however, are gradual, and recurrently enacted minor adjustments seem to leave the basic principles of the scheme intact. In this paper pension reform policies in Germany and Finland will be used to answer the question of when a change is big enough to be labelled as a system shift. It is argued that small “not-system-shifting” changes of the last two decades will eventually alter the basic characteristics of old-age security in both countries. [ABSTRACT FROM AUTHOR]