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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.

Suggested Citation

  • Hendrik Jürges, 2005. "Unemployment, retrospective error, and life satisfaction," MEA discussion paper series 05089, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  • Handle: RePEc:mea:meawpa:05089
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    References listed on IDEAS

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    1. 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.
    2. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    3. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
    4. 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.
    5. Arulampalam, Wiji, 2001. "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," Economic Journal, Royal Economic Society, vol. 111(475), pages 585-606, November.
    6. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    7. George A. Akerlof & Janet L. Yellen, 1985. "Unemployment Through the Filter of Memory," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 747-773.
    8. Gillian Paull, 2002. "Biases in the reporting of labour market dynamics," IFS Working Papers W02/10, Institute for Fiscal Studies.
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