Job Insecurity, Employability, Unemployment and Well-Being
AbstractThis paper shows that employability strongly moderates the effects of unemployment and of job insecurity on well-being. I develop a simple framework for employment insecurity and employability with two key features. First, it allows for the risks surrounding unemployment and employment transitions to affect well-being both directly and indirectly through their impact on expected income. Second, the framework allows for the interaction between unemployment and employability, and between job insecurity and employability. Using panel data from Australia, I provide new random effects and fixed effects estimates of the impact of unemployment and of job insecurity on life satisfaction and on mental health, in the context of a model that takes account of the interacting risks. As predicted, unemployed people with little hope of finding a job enjoy the least well-being by a considerable margin, while employed people who are both highly employable and in a secure job enjoy the most. In between there is substantial differentiation according to employability, job insecurity and their interaction. Compared to a secure job the deleterious effects of high job insecurity on well-being are comparable to the effects of unemployment. Both are substantial. The findings are used to compute estimates of the well-being trade-off between increases in job insecurity and increases in employability, relevant to the support of "flexicurity" and similar employment policies.
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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0918.
Date of creation: Oct 2009
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/
Find related papers by JEL classification:
- J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
- I12 - Health, Education, and Welfare - - Health - - - Health Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-24 (All new papers)
- NEP-HAP-2009-10-24 (Economics of Happiness)
- NEP-LAB-2009-10-24 (Labour Economics)
- NEP-PKE-2009-10-24 (Post Keynesian Economics)
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