Does Unemployment Hurt Less if There is More of it Around? A Panel Analysis of Life Satisfaction in Germany and Switzerland
By Daniel Oesch, O. Lipps. Social Science Research Network, 2013
157 citations recorded by the source corpus.
This paper examines the existence of a habituation effect to unemployment: Do the unemployed suffer less from job loss if unemployment is more widespread, if their own unemployment lasts longer and if unemployment is a recurrent experience? The underlying idea is that unemployment hysteresis may operate through a sociological channel: if many people in the community lose their job and remain unemployed over an extended period, the psychological cost of being unemployed diminishes and the pressure to accept a new job declines. We analyze this question with individual-level data from the German Socio-Economic Panel (1984-2009) and the Swiss Household Panel (2000-2009). We find no evidence for a mitigating effect of high surrounding unemployment on unemployed individuals’ subjective well-being: Becoming unemployed hurts as much when regional unemployment is high as when it is low. Likewise, the strongly harmful impact of being unemployed on well-being does not wear off over time, nor do repeated episodes of unemployment make it any better. It thus appears doubtful that an unemployment shock becomes persistent because the unemployed become used to, and hence reasonably content with, being without a job.
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Citations in the corpus
- The Effects of Unemployment and Insecure Jobs on Well-Being and Health: The Moderating Role of Labor Market Policies (2018, background): “This result is at odds with the idea that unemployment hurts less if there is more of it around (e.g., Oesch and Lipps 2013).”
- Employment status and subjective well-being: the role of the social norm to work (2016, unknown): “The few studies that are available use indirect measures of social norms, such as unemployment rates (Clark, 2003; Clark et al., 2008; Oesch and Lipps, 2012) or referendum data on unemployment benefit reduction (Stutzer and Lalive, 2004).”