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Jobless, Friendless, and Broke: What Happens to Different Areas of Life Before and After Unemployment?

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  • Nattavudh Powdthavee

Abstract

Using a nationally representative longitudinal data of the British people, this paper explores how different areas of a person's life are affected by unemployment. We find evidence that unemployment is preceded, on average, by a year of dissatisfaction with one's finance and job. Once unemployed, the individuals go through a period of financial worries, social isolation, and health loss, as well as fluctuations in marital quality. While the unemployed fully adapt to the drop in health satisfaction, adaptation in other areas of life is less complete. We also find that it makes virtually no difference to the life satisfaction-path before and after unemployment whether one assumes unemployment to affect life satisfaction directly or indirectly via its impacts on different life domains. Finally, the paper discusses the use of instrumented income to estimate the sums required to compensate individuals for each year that they spend in unemployment.

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  • Nattavudh Powdthavee, "undated". "Jobless, Friendless, and Broke: What Happens to Different Areas of Life Before and After Unemployment?," Discussion Papers 09/15, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:09/15
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Diversifying mental states
      by chris dillow in Stumbling and Mumbling on 2013-02-02 19:39:27

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    1. repec:eee:jeborg:v:146:y:2018:i:c:p:206-221 is not listed on IDEAS
    2. Nattavudh Powdthavee, 2012. "Resilience to Economic Shocks and the Long Reach of Childhood Bullying," CEP Discussion Papers dp1173, Centre for Economic Performance, LSE.
    3. André Hajek, 2013. "Life Satisfaction and Unemployment: The Role of Voluntariness and Job Prospects," SOEPpapers on Multidisciplinary Panel Data Research 601, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Buddelmeyer, Hielke & Powdthavee, Nattavudh, 2016. "Can having internal locus of control insure against negative shocks? Psychological evidence from panel data," Journal of Economic Behavior & Organization, Elsevier, vol. 122(C), pages 88-109.
    5. Howley, P., 2016. "Do individuals return to baseline levels of well-being after recovering from poor health?," Health, Econometrics and Data Group (HEDG) Working Papers 16/02, HEDG, c/o Department of Economics, University of York.
    6. Powdthavee, Nattavudh & Vernoit, James, 2012. "The transferable scars: a longitudinal evidence of psychological impact of past parental unemployment on adolescents in the United Kingdom," LSE Research Online Documents on Economics 51510, London School of Economics and Political Science, LSE Library.
    7. Martin Binder & Alex Coad, 2016. "How Satisfied are the Self-Employed? A Life Domain View," Journal of Happiness Studies, Springer, vol. 17(4), pages 1409-1433, August.
    8. Adrian Chadi & Clemens Hetschko, 2017. "Income or Leisure? On the Hidden Benefits of (Un-) Employment," IAAEU Discussion Papers 201706, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Martin Binder & Alex Coad, 2015. "Heterogeneity in the Relationship Between Unemployment and Subjective Wellbeing: A Quantile Approach," Economica, London School of Economics and Political Science, vol. 82(328), pages 865-891, October.
    10. Powdthavee, Nattavudh & Vernoit, James, 2013. "Parental unemployment and children's happiness: A longitudinal study of young people's well-being in unemployed households," Labour Economics, Elsevier, vol. 24(C), pages 253-263.
    11. Moschion, Julie & Powdthavee, Nattavudh, 2018. "The welfare implications of addictive substances: A longitudinal study of life satisfaction of drug users," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 206-221.
    12. Adrian Chadi & Clemens Hetschko, 2015. "How Job Changes Affect People's Lives: Evidence from Subjective Well-Being Data," SOEPpapers on Multidisciplinary Panel Data Research 747, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute for the Study of Labor (IZA).
    14. Kesavayuth, Dusanee & Zikos, Vasileios, 2016. "Does well-being help you with unemployment?," MPRA Paper 71918, University Library of Munich, Germany.
    15. Powdthavee, Nattavudh, 2014. "What childhood characteristics predict psychological resilience to economic shocks in adulthood?," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 84-101.
    16. repec:dug:actaec:y:2016:i:5:p:33-50 is not listed on IDEAS

    More about this item

    Keywords

    Domain satisfaction; Life satisfaction; Adaptation; Unemployment; Happiness;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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