Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150700
Authors: 
Clark, Andrew
Knabe, Andreas
Rätzel, Steffen
Year of Publication: 
2008
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research 153
Abstract: 
The social norm of unemployment suggests that aggregate unemployment reduces the wellbeing 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. Those with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, the insecure employed and the poor-prospect unemployed are less negatively, or even positively, affected. We use our results to analyse labour-market inequality and unemployment hysteresis.
Subjects: 
Unemployment
Externalities
Job Insecurity
Well-Being
JEL: 
D84
J60
Document Type: 
Working Paper

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