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Job loss and mental health: The role of anticipation and re-employment in recovery patterns

Author

Listed:
  • Olivier Bargain

    (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Nicolas Hérault

    (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Daniel Nettle

    (IJN - Institut Jean-Nicod - DEC - Département d'Etudes Cognitives - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CdF (institution) - Collège de France - CNRS - Centre National de la Recherche Scientifique - Département de Philosophie - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres, Northumbria University [Newcastle])

Abstract

Job loss is known to adversely affect mental health, but the time course of recovery and the role of anticipation remain unclear. Using 22 annual waves (2001-2022) of the Household, Income and Labour Dynamics in Australia (HILDA) survey, we estimate fixed-effects models to examine the relationship between redundancy and mental health (SF-36), incorporating subjective probability of job loss to refine anticipation measures. The final sample consists of 14,195 individuals and 4251 redundancy events. Three key findings emerge. First, we document a generalized decline in mental health prior to job loss that is not confined to individuals who anticipate redundancy, suggesting psychological costs of impending job loss due to factors other than anticipation. Second, we document complete recovery among those who are re-employed, revealing that psychological restoration can occur relatively quickly upon securing new employment. Third, perceived anticipation of job loss does not appear to meaningfully alter these post-redundancy recovery trajectories. These findings call for greater emphasis on employment trajectories in both research and policy aimed at understanding and mitigating the mental health impacts of job loss.

Suggested Citation

  • Olivier Bargain & Nicolas Hérault & Daniel Nettle, 2026. "Job loss and mental health: The role of anticipation and re-employment in recovery patterns," Post-Print hal-05582314, HAL.
    • Handle: RePEc:hal:journl:hal-05582314
    DOI: 10.1016/j.socscimed.2026.119247
    Note: View the original document on HAL open archive server: https://hal.science/hal-05582314v1
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    Keywords

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    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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