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The aim of this paper is to model the dynamic path of adjustment towards pre‐unemployment levels of wellbeing for a group of full‐time workers who experienced job loss.

Based on data from the German Socio‐economic Panel, a large‐scale panel survey, the paper captures the non‐linear nature of the adaptation process by using an Exponential Smooth Transition Autoregressive (ESTAR) model.

The study finds that adaptation takes place in a non‐linear fashion, with the speed of adjustment being higher for high earners, those with high pre‐unemployment levels of life satisfaction and those who were most satisfied with their jobs before becoming unemployed. It also finds that most of the adaptation takes place during the first year of unemployment, with adaptation speeds decreasing with unemployment duration, suggestive of possible habituation effects being present.

This is the first study to model the dynamic path of adjustment towards pre‐unemployment wellbeing levels as a non‐linear process. Despite the challenge posed by adaptation theory and the recent interest in the wellbeing effects of job loss, there is only sparse empirical evidence on the dynamics of the adaptation to unemployment process.

The purpose of this paper is to explore the role of work conditions and job characteristics with respect to three subjective well-being (SWB) indicators: life satisfaction, job satisfaction and satisfaction with work-life balance. From a methodological point of view, the paper shows how social sciences can benefit from the use of voluntary web survey data.

The paper makes use of a large sample of individual data obtained from voluntary web surveys collected as part of the WageIndicator project. The sample includes extensive information on the quality of working conditions together with different well-being indicators. The propensity score adjustment weights are used to improve the sample performance.

The results shed light on the importance of certain job characteristics not only in determining job satisfaction, but also in other SWB domains. The findings support the theory of spillover perspectives, according to which satisfaction in one domain affects other domains.

As a voluntary web-survey, WageIndicator is affected by selection bias. The validity of the sample can be improved by weighting, but this adjustment should be made and tested on a country-by-country basis.

The paper provides analysis of the quality of a web survey not commonly used in happiness research. The subsequent presentation of the effects of working conditions on several satisfaction domains represents a contribution to the literature.