Boon or Bane? Others' Unemployment, Well-being and Job Insecurity

Andrew Clark (), Andreas Knabe () and Steffen Rätzel

No CESifo Working Paper No. 2501, CESifo Working Paper Series from CESifo Group Munich

Abstract: The social norm of unemployment suggests that aggregate unemployment reduces the well-being of the employed, but has a far smaller effect on the unemployed. We use German panel data to reproduce this standard result, but then suggest that the appropriate distinction may not be between employment and unemployment, but rather between higher and lower levels of labour-market security. Those with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, the insecure employed and the poor-prospect unemployed are less negatively, or even positively, affected. We use our results to analyse labour-market inequality and unemployment hysteresis.

Keywords: unemployment; externalities; job insecurity; well-being (search for similar items in EconPapers)
JEL-codes: D84 J60 Z13 (search for similar items in EconPapers)
Date: 2008
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Related works:
Working Paper: Boon or Bane?: Others' Unemployment, Well-Being and Job Insecurity (2008)
Working Paper: Boon or Bane? Others' unemployment, well-being and job insecurity (2008)
Working Paper: Boon or Bane? Others' Unemployment, Well-being and Job Insecurity (2009)
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