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Biased by success and failure: How unemployment shapes locus of control

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  • Preuss, Malte
  • Hennecke, Juliane

Abstract

We test the stability of locus of control, a measure that has been attributed substantial explanatory power for economic outcomes since it depicts how much people believe in their ability to affect life outcomes. Using the German Socio-Economic Panel, we find that a job loss due to a plant closure has no long-lasting effect on locus of control. The common assumption of its stability is thus not rejected. However, during unemployment, control perception decreases by 30 percent of one standard deviation. The effect holds true independent from unemployment duration or socio-demographic characteristics and vanishes as soon as the unemployed find a new job. We therefore conclude that stated locus of control is affected by unemployment. Using this trait as explanatory variable can thus lead to biased estimations when this temporary deviation in measurement is not accounted for.

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  • Preuss, Malte & Hennecke, Juliane, 2018. "Biased by success and failure: How unemployment shapes locus of control," Labour Economics, Elsevier, vol. 53(C), pages 63-74.
    • Handle: RePEc:eee:labeco:v:53:y:2018:i:c:p:63-74
    DOI: 10.1016/j.labeco.2018.05.007
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    Cited by:

    1. Hetschko, Clemens & Preuss, Malte, 2020. "Income in jeopardy: How losing employment affects the willingness to take risks," Journal of Economic Psychology, Elsevier, vol. 79(C).
    2. Hetschko, Clemens & Knabe, Andreas & Schöb, Ronnie, 2021. "Happiness, Work, and Identity," GLO Discussion Paper Series 783, Global Labor Organization (GLO).
    3. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2019. "Looking Back in Anger? Retirement and Unemployment Scarring," Demography, Springer;Population Association of America (PAA), vol. 56(3), pages 1105-1129, June.
    4. Szabó-Morvai, Ágnes & Kiss, Hubert János & Károlyi, Róbert, 2023. "Kontrollhely Magyarországon - egy reprezentatív felmérés eredményei [Locus of Control in Hungary: The results of a representative survey]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 847-871.
    5. Marco Caliendo & Juliane Hennecke, 2022. "Drinking is different! Examining the role of locus of control for alcohol consumption," Empirical Economics, Springer, vol. 63(5), pages 2785-2815, November.
    6. Andrew E Clark & Rong Zhu, 2024. "Taking Back Control? Quasi-Experimental Evidence on the Impact of Retirement on Locus of Control," The Economic Journal, Royal Economic Society, vol. 134(660), pages 1465-1493.
    7. Preuss, Malte, 2021. "Intra-individual stability of two survey measures on forward-looking attitude," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 201-227.
    8. Marta Palczynska, 2018. "Wage premia for skills: The complementarity of cognitive and non-cognitive skills," IBS Working Papers 09/2018, Instytut Badan Strukturalnych.
    9. Pons Rotger, Gabriel & Rosholm, Michael, 2020. "The Role of Beliefs in Long Sickness Absence: Experimental Evidence from a Psychological Intervention," IZA Discussion Papers 13582, Institute of Labor Economics (IZA).
    10. Friehe, Tim & Marcus, Jan, 2021. "Lost job, lost trust? On the effect of involuntary job loss on trust," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 84, pages 1-1.
    11. Juliane Hennecke, 2024. "The independent woman—locus of control and female labor force participation," Review of Economics of the Household, Springer, vol. 22(1), pages 329-357, March.
    12. Antoine Marsaudon, 2022. "Do Hospital Stays Modify Locus of Control?," De Economist, Springer, vol. 170(2), pages 257-277, May.
    13. Bucciol, Alessandro & Trucchi, Serena, 2021. "Locus of control and saving: The role of saving motives," Journal of Economic Psychology, Elsevier, vol. 86(C).
    14. Shoji, Masahiro, 2020. "Early-Life Circumstances and Adult Locus of Control: Evidence from 46 Developing Countries," MPRA Paper 99987, University Library of Munich, Germany.
    15. Miele, Kai R., 2024. "Mental Health and Labor Market Effects of Anticipating Job Loss," CINCH Working Paper Series (since 2020) 82169, Duisburg-Essen University Library, DuEPublico.
    16. Masahiro Shoji, 2023. "Gendered effects of early childhood weather shocks on locus of control: evidence from 28 agricultural countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1363-1393, July.
    17. Juliane Hennecke, 2020. "Locus of Control and Female Labor Force Participation," Working Papers 2020-03, Auckland University of Technology, Department of Economics.
    18. Aronsson, Thomas & Hetschko, Clemens & Schöb, Ronnie, 2020. "Globalization, Time-Preferences, and Populist Voting," Umeå Economic Studies 978, Umeå University, Department of Economics.
    19. Wolf, Tobias, 2020. "Welfare while working: How does the life satisfaction approach help to explain job search behavior?," Discussion Papers 2020/14, Free University Berlin, School of Business & Economics.
    20. Aronsson, Thomas & Hetschko, Clemens & Schöb, Ronnie, 2023. "Populism and Impatience," Umeå Economic Studies 1019, Umeå University, Department of Economics.

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    More about this item

    Keywords

    Personality; Locus of control; Unemployment; Measurement error;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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