Job loss and mental health: The role of anticipation and re-employment in recovery patterns

Olivier Bargain, Nicolas Hérault and Daniel Nettle ()
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Nicolas Hérault: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Daniel Nettle: IJN - Institut Jean-Nicod - DEC - Département d'Etudes Cognitives - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CdF (institution) - Collège de France - CNRS - Centre National de la Recherche Scientifique - Département de Philosophie - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres, Northumbria University [Newcastle]

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Abstract: Job loss is known to adversely affect mental health, but the time course of recovery and the role of anticipation remain unclear. Using 22 annual waves (2001-2022) of the Household, Income and Labour Dynamics in Australia (HILDA) survey, we estimate fixed-effects models to examine the relationship between redundancy and mental health (SF-36), incorporating subjective probability of job loss to refine anticipation measures. The final sample consists of 14,195 individuals and 4251 redundancy events. Three key findings emerge. First, we document a generalized decline in mental health prior to job loss that is not confined to individuals who anticipate redundancy, suggesting psychological costs of impending job loss due to factors other than anticipation. Second, we document complete recovery among those who are re-employed, revealing that psychological restoration can occur relatively quickly upon securing new employment. Third, perceived anticipation of job loss does not appear to meaningfully alter these post-redundancy recovery trajectories. These findings call for greater emphasis on employment trajectories in both research and policy aimed at understanding and mitigating the mental health impacts of job loss.

Keywords: Job loss; Mental health; Anticipation; Unemployment; Panel data (search for similar items in EconPapers)
Date: 2026-06
Note: View the original document on HAL open archive server: https://hal.science/hal-05582314v1
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Published in Social Science & Medicine, 2026, 399, pp.119247. ⟨10.1016/j.socscimed.2026.119247⟩

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Working Paper: Job Loss and Mental Health: The Role of Anticipation and Re-employment in Recovery Patterns (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05582314

DOI: 10.1016/j.socscimed.2026.119247

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