The Emotional Timeline of Unemployment: Anticipation, Reaction, and Adaptation

Unemployment continues to be one of the major challenges in industrialized societies. Aside from its economic and societal repercussions, questions concerning the subjective experience of unemployment have recently attracted increasing attention. Although existing studies have documented the detrimental effects of unemployment for cognitive (life satisfaction) and affective well-being, studies directly comparing these two dimensions of subjective well-being and their temporal dynamics in anticipation of and response to unemployment are absent from the literature. Using longitudinal data of the German Socio-Economic Panel (SOEP) and applying fixed effects regressions, we investigate changes in cognitive and affective well-being prior to and after job loss. Extending previous studies, we use discrete emotion measures instead of affect balance indicators to assess affective well-being. Our results support existing findings that unemployment leads to decreases in life satisfaction and that the unemployed do not adapt towards previous levels of life satisfaction. We also find that individuals more often experience sadness and anxiety, and less often happiness when transitioning into unemployment. Importantly, changes in affective well-being are less enduring compared to the changes in life satisfaction.