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Unemployment Expectations, Credit Commitments and Psychological Health

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  • John Gathergood

Abstract

Using individual-level panel data, this paper examines the relationship between subjective unemployment expectations and psychological health. Individuals expecting to become unemployed within the next year exhibit higher rates of suffering from anxiety plus worse psychological health based on the General Health Questionnaire (GHQ) Caseness measure. We investigate the role of household credit commitments in this relationship. In our sample holding credit is associated with better psychological health. However, credit commitments worsen the relationship between expected unemployment and psychological health. The strongest effect is found for unsecured credit, with the average effect of expected unemployment on psychological health is approximately twice as severe among those with outstanding unsecured credit commitments.

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File URL: http://www.nottingham.ac.uk/cfcm/documents/papers/12-03.pdf
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Paper provided by University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) in its series Discussion Papers with number 12/03.

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Handle: RePEc:not:notcfc:12/03

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Keywords: unemployment; psychological health; credit; indebtedness;

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  16. 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.
  17. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  18. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  19. Green, Francis, 2011. "Unpacking the misery multiplier: How employability modifies the impacts of unemployment and job insecurity on life satisfaction and mental health," Journal of Health Economics, Elsevier, vol. 30(2), pages 265-276, March.
  20. Sarah Bridges & Richard Disney, 2004. "Use of credit and arrears on debt among low-income families in the United Kingdom," Fiscal Studies, Institute for Fiscal Studies, vol. 25(1), pages 1-25, March.
  21. Martin Browning & Anne Moller Dano & Eskil Heinesen, 2006. "Job displacement and stress-related health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1061-1075.
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