Does unemployment hurt less if there is more of it around? A panel analysis of life satisfaction in Germany and Switzerland

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Serval ID
serval:BIB_2B30975CB3FC
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Does unemployment hurt less if there is more of it around? A panel analysis of life satisfaction in Germany and Switzerland
Journal
European Sociological Review
Author(s)
Oesch Daniel, Lipps Oliver
Publication state
Published
Issued date
2013
Peer-reviewed
Oui
Volume
29
Number
5
Pages
955-967
Language
english
Abstract
This article examines the existence of a habituation effect to unemployment: Does the subjective well-being of unemployed people decline less if unemployment is more widespread? 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 (1984-2010) and the Swiss Household Panel (2000-2010). Our fixed-effects estimates show no evidence for a mitigating effect of high surrounding unemployment on the subjective well-being of the unemployed. 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.
Keywords
subjective well-being, unemployment, hysteresis, happiness, social norm
Create date
12/07/2012 14:40
Last modification date
20/08/2019 14:10
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