Creative Destruction and Subjective Well-Being.

In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing. 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 wellbeing; (iii) job destruction has a less negative impact in US Metropolitan Statistical Areas (MSA) within states with more generous unemployment insurance policies; (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross-sectional MSA-level and individual-level data provide empirical support to these predictions.