Steffen Rätzel

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

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”.

Dissatisfied with Life, but Having a Good Day: Time-Use and Well-Being of the Unemployed

We apply the Day Reconstruction Method to compare unemployed and employed people with respect to their subjective assessment of emotional affects, differences in the composition and duration of activities during the course of a day, and their self-reported life satisfaction. Employed persons are more satisfied with their life than the unemployed and report more positive feelings when engaged in similar activities. Weighting these activities with their duration shows, however, that average experienced utility does not differ between the two groups. Although the unemployed feel sadder when engaged in similar activities, they can compensate this by using the time the employed are at work in more enjoyable ways. Our finding that unemployment affects life satisfaction and experienced utility differently may be explained by the fact that people do not adjust their aspirations when becoming unemployed but face hedonic adaptation to changing life circumstances, triggered by the opportunity to use the time in a way that yields higher levels of satisfaction than working.

Right-Wing Extremism and the Well-Being of Immigrants

This study analyzes the effects of right-wing extremism on the well-being of immigrants based on data from the German Socio-Economic Panel (SOEP) for the years 1984 to 2006 merged with state-level information on election outcomes. The results show that the life satisfaction of immigrants is significantly reduced if right-wing extremism in the native population increases. Moreover, the life satisfaction of highly educated immigrants is affected more strongly than that of low-skilled immigrants. This supports the view that policies aimed at making immigration more attractive to the high-skilled have to include measures that reduce xenophobic attitudes in the native population.

Quantifying the Psychological Costs of Unemployment: The Role of Permanent Income

Unemployment causes significant losses in the quality of life. In addition to reducing individual income, it also creates non-pecuniary, psychological costs. We quantify these non-pecuniary losses by using the life satisfaction approach. In contrast to previous studies, we apply Friedmans (1957) permanent income hypothesis by distinguishing between temporary and permanent effects of income changes. This allows us to account for intertemporal spillovers of income compensations. Our results show that, without this distinction, the non-pecuniary costs of unemployment are overestimated by roughly one-third. Nevertheless, the non-pecuniary costs of unemployment with this modified quantification method still amount to 2.3 (1.5) times the pure pecuniary costs of unemployment for men (women).This confirms the high value of work for life satisfaction.

Unemployment as a Social Norm in Germany

This paper investigates the relationship between the subjective well-being of both the employed and unemployed and regional unemployment rates. While both employed and unemployed men suffer from regional unemployment, unemployed men are significantly less negatively affected. This is consistent with a social norm effect of unemployment in Germany. We find no evidence of such an offsetting effect for women.

Wie zufrieden macht die Arbeit

Die hohe Arbeitslosigkeit stellt nach wie vor eines der grosten Probleme der deutschen Wirtschaftspolitik dar. Zur Bewertung der volkswirtschaftlichen Kosten der Arbeitslosigkeit werden dabei, neben den fiskalischen Belastungen, vor allem die direkten Kosten infolge individueller pekuniarer Einkommensverluste durch Arbeitslosigkeit herangezogen. Ein weiterer bedeutender Effekt, der bisher insbesondere im Fokus der soziologischen und der psychologischen Forschung stand, aber in den letzten Jahren auch in der okonomischen Wissenschaft zunehmend Beachtung findet, ist, dass Arbeitslosigkeit zusatzlich indirekte, nicht pekuniare Kosten verursacht. Diese entstehen in Form eines individuellen Verlusts an Lebenszufriedenheit, der nicht durch den reinen Einkommensverlust erklart werden kann. Arbeitslosigkeit fuhrt bei den unmittelbar Betroffenen zu bedeutenden Verlusten ihrer Lebensqualitat: sinkendes Selbstwertgefuhl, Zukunftsunsicherheit, soziale Isolation, Stigmatisierung, Verschlechterung des Gesundheitszustandes und psychische Storungen sind haufige Begleiter der Arbeitslosigkeit.