Losing a Job: The Nonpecuniary Cost of Unemployment in the United States

http://www.washingtonmonthly.com/political-animal-a/2013_12/recent_research_on_the_impact048205.php

http://www.stanford.edu/~cy10/public/Losing_a_Job.pdf

Cristobal Young,
Stanford University

Drawing on the Panel Study of Income Dynamics, I track the subjective well-being of individuals as they enter and exit unemployment. Job loss is a salient trigger event that sets off large changes in well-being. The factors expected to improve the lot of the unemployed have limited efficacy: (1) changes in family income are not significantly correlated with well-being; (2) unemployment insurance eligibility seems to partly mitigate the effect of job loss, but is a poor substitute for work; and (3)
even reemployment recovers only about two thirds of the initial harm of job loss, indicating a potential long-term scar effect of unemployment. This highlights the deep and intractable hardship caused by unemployment in America.

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