Is there a happiness premium for working in the public sector? Evidence from Italy

Is there a happiness premium for working in the public sector? We empirically explore this question using a large sample of about 15,000 Italian employees, from 2004 to 2016. We find that happiness increases with economic conditions, defined as either wealth, job salary, total income or as a factor combining these three pieces of information. Moreover, public employees are on average happier than private employees. This effect, however, holds only for individuals in relatively more deprived economic conditions. For better off individuals, there is no difference in happiness between public and private employees. We conclude that there is a happiness premium for working in the public sector, but only among individuals living in low economic conditions. In particular, their happiness gain is able to compensate the gap these individuals face with respect to private employees with medium economic conditions. Our findings add to the relatively scant empirical literature on psychological wellbeing and public employment.