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

Nattavudh Powdthavee ()

Discussion Papers from Department of Economics, University of York

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.

Keywords: Domain satisfaction; Life satisfaction; Adaptation; Unemployment; Happiness (search for similar items in EconPapers)
JEL-codes: I31 J6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-soc
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Journal Article: Jobless, Friendless and Broke: What Happens to Different Areas of Life Before and After Unemployment? (2012) Downloads
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