This paper provides some of the first empirical evidence on the psychological impact of past unemployment. Using eleven waves of the German socio-economic panel (GSOEP) data set, we show, as is now standard, that those currently unemployed have far lower life satisfaction scores than do the currently employed. We also show that, over the whole sample, well-being is lower the greater has been the past experience of unemployment. In this sense, unemployment scars. However, an interaction term between current and past unemployment attracts a positive coefficient. This suggests a habituation effect whereby the negative well-being effect of unemployment is much lower for those who have been unemployed more often in the past. We also use the panel aspect of our data to present some evidence that those who suffer greater falls in well-being on entering unemployment are less likely to remain unemployed one year later. Together these findings offer a psychological explanation of persistent unemployment.
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Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number
9903.
Length: Date of creation: Jan 1999 Date of revision: Handle: RePEc:ukc:ukcedp:9903
Contact details of provider: Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP Phone: +44 (0)1227 764000 Fax: +44 (0)1227 827850 Web page: http://www.ukc.ac.uk/economics/
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Find related papers by JEL classification: D10 - Microeconomics - - Household Behavior - - - General J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Di Tella, R. & MacCulloch, R.J.: Oswald, A.J., 1997.
"The Macroeconomics of Happiness,"
Papers
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Clark, Andrew E & Oswald, Andrew J, 1994.
"Unhappiness and Unemployment,"
Economic Journal,
Royal Economic Society, vol. 104(424), pages 648-59, May.
[Downloadable!] (restricted)
Wiji Arulampalam & Alison Booth & Mark P. Taylor, 1998.
"Unemployment Persistence,"
ILR working papers
019, Institute for Labour Research.
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