Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk
AbstractWe reassess the “scarring” hypothesis by Clark et al. (2001), which states that unemployment experienced in the past reduces a person’s current life satisfaction even after the person hasbecome reemployed. Our results suggest that the scar from past unemployment operates via worsened expectations of becoming unemployed in the future, and that it is future insecurity that makes people unhappy. Hence, the terminology should be altered by one letter: past unemployment “scars” because it “scares”.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2457.
Date of creation: 2008
Date of revision:
unemployment; scarring; happiness; life satisfaction;
Other versions of this item:
- Andreas Knabe & Steffen Rätzel, 2011. "Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk," Economica, London School of Economics and Political Science, vol. 78(310), pages 283-293, 04.
- Andreas Knabe & Steffen Rätzel, 2008. "Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk," FEMM Working Papers 08013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
- D10 - Microeconomics - - Household Behavior - - - General
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
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