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Boon or Bane?: Others' Unemployment, Well-Being and Job Insecurity

Author

Listed:
  • Andrew Clark
  • Andreas Knabe
  • Steffen Rätzel

Abstract

The social norm of unemployment suggests that aggregate unemployment reduces the wellbeing of the employed, but has a far smaller effect on the unemployed. We use German panel data to reproduce this standard result, but then suggest that the appropriate distinction may not be between employment and unemployment, but rather between higher and lower levels of labour-market security. Those with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, the insecure employed and the poor-prospect unemployed are less negatively, or even positively, affected. We use our results to analyse labour-market inequality and unemployment hysteresis.

Suggested Citation

  • Andrew Clark & Andreas Knabe & Steffen Rätzel, 2008. "Boon or Bane?: Others' Unemployment, Well-Being and Job Insecurity," SOEPpapers on Multidisciplinary Panel Data Research 153, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp153
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    as
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    More about this item

    Keywords

    Unemployment; Externalities; Job Insecurity; Well-Being;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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