Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35690 
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers No. 4210
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
The social norm of unemployment suggests that aggregate unemployment reduces the well-being of the employed, but has a far smaller effect on the unemployed. We use German panel data to reproduce this standard result, but then suggest that the appropriate distinction may not be between employment and unemployment, but rather between higher and lower levels of labour-market security, at least for men. Men with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, insecure employed men and poor-prospect unemployed men are less negatively, or even positively, affected. There is however no clear relationship for women. We analyse labour-market inequality and unemployment hysteresis in the light of our results.
Subjects: 
Unemployment
externalities
job insecurity
well-being
JEL: 
I31
D84
J60
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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