Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk
University of Magdeburg - Institute of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
affiliation not provided to SSRN
March 14, 2011
Economica, Vol. 78, No. 310, pp. 283-293, 2011
We reassess the scarring hypothesis 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.
Number of Pages in PDF File: 11Accepted Paper Series
Date posted: March 16, 2011
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