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

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Author Info

  • Clark, Andrew E.

    ()
    (Paris School of Economics)

  • Knabe, Andreas

    ()
    (Otto-von-Guericke University Magdeburg)

  • Rätzel, Steffen

    ()
    (Otto-von-Guericke University Magdeburg)

Abstract

The social norm of unemployment suggests that aggregate unemployment reduces the well-being 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, at least for men. Men with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, insecure employed men and poor-prospect unemployed men are less negatively, or even positively, affected. There is however no clear relationship for women. We analyse labour-market inequality and unemployment hysteresis in the light of our results.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4210.

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Length: 30 pages
Date of creation: Jun 2009
Date of revision:
Publication status: published in: Labour Economics, 2010, 17 (1), 52-61
Handle: RePEc:iza:izadps:dp4210

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Keywords: unemployment; externalities; job insecurity; well-being;

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