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Perceived job insecurity and well-being revisited: Towards conceptual clarity


  • Geishecker, Ingo


This paper analyzes the impact of job insecurity perceptions on individual well-being. While previous studies on the subject have used the concept of perceived job insecurity rather arbitrarily, the present analysis explicitly takes into account individual perceptions about both the likelihood and the potential costs of job loss. We demonstrate that any model assessing the impact of perceived job insecurity on individual well-being potentially suffers from simultaneity bias yielding upward-biased coefficients. When applying our concept of perceived job insecurity to concrete data from a large household panel survey we find the true unbiased effects of perceived job insecurity to be more than twice the size of estimates that ignore simultaneity. Accordingly, perceived job insecurity ranks as one of the most important factors in employee well-being and paradoxically can be even more harmful than actual job loss with subsequent unemployment.

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  • Geishecker, Ingo, 2009. "Perceived job insecurity and well-being revisited: Towards conceptual clarity," Center for European, Governance and Economic Development Research Discussion Papers 90, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:90

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    References listed on IDEAS

    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. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    3. Linz, Susan J. & Semykina, Anastasia, 2008. "How do workers fare during transition? Perceptions of job insecurity among Russian workers, 1995-2004," Labour Economics, Elsevier, vol. 15(3), pages 442-458, June.
    4. Ferrie, Jane E. & Shipley, Martin J. & Newman, Katherine & Stansfeld, Stephen A. & Marmot, Michael, 2005. "Self-reported job insecurity and health in the Whitehall II study: potential explanations of the relationship," Social Science & Medicine, Elsevier, vol. 60(7), pages 1593-1602, April.
    5. Andrew Benito, 2006. "Does job insecurity affect household consumption?," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 157-181, January.
    6. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, March.
    7. Keith Bender & Peter Sloane, 1999. "Trade union membership, tenure and the level of job insecurity," Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 123-135.
    8. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    9. Schmidt, Stefanie R, 1999. "Long-Run Trends in Workers' Beliefs about Their Own Job Security: Evidence from the General Social Survey," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 127-141, October.
    10. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
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    Cited by:

    1. Benjamin Artz & Ilker Kaya, 2014. "Job insecurity and job satisfaction in the United States: the case of public sector union workers," Industrial Relations Journal, Wiley Blackwell, vol. 45(2), pages 103-120, March.

    More about this item


    job security; life satisfaction; unemployment;

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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