Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk

Andreas Knabe and Steffen Rätzel

No 2457, CESifo Working Paper Series from CESifo

Abstract: We reassess the “scarring” hypothesis by Clark et al. (2001), which states that unemployment experienced in the past reduces a person’s current life satisfaction even after the person has become reemployed. Our results suggest that the scar from past unemployment operates via worsened expectations of becoming unemployed in the future, and that it is future insecurity that makes people unhappy. Hence, the terminology should be altered by one letter: past unemployment “scars” because it “scares”.

Keywords: unemployment; scarring; happiness; life satisfaction (search for similar items in EconPapers)
JEL-codes: D10 I31 J60 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk (2011)
Working Paper: Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2457

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