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Jobless, Friendless and Broke: What Happens to Different Areas of Life Before and After Unemployment?

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  • Nattavudh Powdthavee

Abstract

Using a nationally representative longitudinal data of the British people, this paper explores how different areas of a person's life are affected by unemployment. We find evidence that unemployment is preceded, on average, by a year of dissatisfaction with one's finance and job. Once unemployed, the individuals go through a period of financial worries, social isolation, and health loss, as well as fluctuations in marital quality. While the unemployed fully adapt to the drop in health satisfaction, adaptation in other areas of life is less complete. We also find that it makes virtually no difference to the life satisfaction-path before and after unemployment whether one assumes unemployment to affect life satisfaction directly or indirectly via its impacts on different life domains. Finally, the paper discusses the use of instrumented income to estimate the sums required to compensate individuals for each year that they spend in unemployment.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 79 (2012)
Issue (Month): 315 (07)
Pages: 557-575

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Handle: RePEc:bla:econom:v:79:y:2012:i:315:p:557-575

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  1. Andrew Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2003. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," DELTA Working Papers 2003-14, DELTA (Ecole normale supérieure).
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  3. Andrew Clark & Yannis Georgellis & Peter Sanfey, 1999. "Scarring: The Psychological Impact of Past Unemployment," Studies in Economics 9903, Department of Economics, University of Kent.
  4. Andrew J. Oswald & Nattavudh Powdthavee, 2008. "Death, Happiness, and the Calculation of Compensatory Damages," The Journal of Legal Studies, University of Chicago Press, vol. 37(S2), pages S217-S251, 06.
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  6. Bruno S. Frey & Alois Stutzer, . "What can Economists Learn from Happiness Research?," IEW - Working Papers 080, Institute for Empirical Research in Economics - University of Zurich.
  7. Geeta Kingdon & John Knight, 2001. "Unemployment in South Africa: the nature of the beast," Economics Series Working Papers WPS/2001-15, University of Oxford, Department of Economics.
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  9. Gerlach, Knut & Stephan, Gesine, 1996. "A paper on unhappiness and unemployment in Germany," Economics Letters, Elsevier, vol. 52(3), pages 325-330, September.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Diversifying mental states
    by chris dillow in Stumbling and Mumbling on 2013-02-02 13:39:27
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Nattavudh Powdthavee, 2012. "Resilience to economic shocks and the long reach of childhood bullying," LSE Research Online Documents on Economics 51520, London School of Economics and Political Science, LSE Library.
  2. André Hajek, 2013. "Life Satisfaction and Unemployment: The Role of Voluntariness and Job Prospects," SOEPpapers on Multidisciplinary Panel Data Research 601, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Nattavudh Powdthavee & James Vernoit, 2012. "The transferable scars: a longitudinal evidence of psychological impact of past parental unemployment on adolescents in the United Kingdom," LSE Research Online Documents on Economics 51510, London School of Economics and Political Science, LSE Library.
  4. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute for the Study of Labor (IZA).

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