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Unemployment, retrospective error, and life satisfaction

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  • Hendrik Jürges

    ()
    (Munich Center for the Economics of Aging (MEA))

Abstract

I compare current and one-year retrospective data on unemployment in the German SOEP. 13 percent of all unemployment spells are not reported one year later, and another 7 percent are misreported. The ratio of retrospective to current unemployment (as a measure of unemployment salience) has increased in recent years and it is related to the loss in life satisfaction associated with unemployment. Individuals with weak labor force attachment, e.g. women with children or individuals close to retirement, have the largest propensity to underreport unemployment retrospectively. The data are consistent with evidence on retrospective bias found by cognitive psychologists and survey methodologists.

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Paper provided by Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy in its series MEA discussion paper series with number 05089.

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Date of creation: 30 Jun 2005
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Handle: RePEc:mea:meawpa:05089

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Postal: Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy, Amalienstraße 33, 80799 München, Germany
Phone: +49/89/38602.442
Fax: +49/89/38602.490
Web page: http://www.mea.mpisoc.mpg.de/

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  1. Hujer, Reinhard & Schneider, Hilmar, 1989. "The analysis of labor market mobility using panel data," European Economic Review, Elsevier, vol. 33(2-3), pages 530-536, March.
  2. Arulampalam, Wiji, 2000. "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," IZA Discussion Papers 189, Institute for the Study of Labor (IZA).
  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. Jennifer Hunt, 1992. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Discussion Papers of DIW Berlin 50, DIW Berlin, German Institute for Economic Research.
  5. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
  6. repec:ese:iserwp:97-19 is not listed on IDEAS
  7. Gillian Paull, 2002. "Biases in the reporting of labour market dynamics," IFS Working Papers W02/10, Institute for Fiscal Studies.
  8. Akerlof, George A & Yellen, Janet L, 1985. "Unemployment through the Filter of Memory," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 747-73, August.
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