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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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    1. Diversifying mental states
      by chris dillow in Stumbling and Mumbling on 2013-02-02 19:39:27

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    1. 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.
    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. Adrian Chadi & Clemens Hetschko, 2021. "How Job Changes Affect People's Lives — Evidence from Subjective Well‐Being Data," British Journal of Industrial Relations, London School of Economics, vol. 59(2), pages 279-306, June.
    5. 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.
    6. 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.
    7. 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.
    8. Martin Binder & Alex Coad, 2015. "Unemployment impacts differently on the extremes of the distribution of a comprehensive well-being measure," Applied Economics Letters, Taylor & Francis Journals, vol. 22(8), pages 619-627, May.
    9. 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.
    10. 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).
    11. 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.
    12. 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.
    13. Dusanee Kesavayuth & Vasileios Zikos, 2018. "Happy People Are Less Likely To Be Unemployed: Psychological Evidence From Panel Data," Contemporary Economic Policy, Western Economic Association International, vol. 36(2), pages 277-291, April.
    14. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute of Labor Economics (IZA).
    15. Jianbo Luo, 2020. "A Pecuniary Explanation for the Heterogeneous Effects of Unemployment on Happiness," Journal of Happiness Studies, Springer, vol. 21(7), pages 2603-2628, October.
    16. Suppa, Nicolai, 2021. "Unemployment and subjective well-being," GLO Discussion Paper Series 760, Global Labor Organization (GLO).
    17. Kesavayuth, Dusanee & Zikos, Vasileios, 2016. "Does well-being help you with unemployment?," MPRA Paper 71918, University Library of Munich, Germany.
    18. 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.
    19. Chengedzai Mafini & Daniel Francois Meyer, 2016. "Satisfaction with Life Amongst the Urban Poor: Empirical Results from South Africa," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(5), pages 33-50, OCTOBER.
    20. Martin Binder & Alex Coad, 2014. "How satisfied are the self-employed? A life domain view," SPRU Working Paper Series 2014-17, SPRU - Science Policy Research Unit, University of Sussex Business School.

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    More about this item

    Keywords

    Domain satisfaction; Life satisfaction; Adaptation; Unemployment; Happiness;
    All these keywords.

    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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