Abstract

This study investigates the effect of job stress on happiness, using nationally representative data from Canadian Community Health Survey, 2012: Mental Health Component (CCHS), produced by the Health Statistics Division (2023). Happiness is measured through life satisfaction, which closely tracks mental health but also carries
broader implications for both productivity and well-being. While job stress has long
been linked to psychological distress and reduced productivity, identifying its impact
is complicated by endogeneity, as unobserved traits such as coping ability or person
ality may influence both reported stress and satisfaction. To address this, this study
estimates a recursive system of three ordered probit models using the Conditional
Mixed Process (CMP) estimator. The model specifies that job stress affects job satisfaction, and job satisfaction in turn affects life satisfaction. Using hectic work pace
and interpersonal work conflict as instrumental variables for job stress, the findings reveal that job stress significantly reduces job satisfaction, and job satisfaction, in turn,
strongly enhances life satisfaction. However, job stress does not have a statistically
significant direct effect on life satisfaction. These results support a mediation pathway
where job stress indirectly affects life satisfaction through job satisfaction, a path often linked to broader mental well-being in existing literature. The model also reveals
meaningful correlations in the unobserved components across equations, highlighting
deeper structural links between workplace conditions and individual well-being. These
findings underscore the importance of creating supportive job environments and addressing psychosocial risk factors to improve happiness and mental health outcomes among workers.