Quantitative Analysis of the Links between Psychological Well-being & Employment Outcomes: International Evidence

Abstract

This thesis seeks principally to examine the nature of the long-term associations between human well-being and unfavourable employment outcomes. Given the surge in insecure employment and unemployment following the Great Recession, it identifies unemployment and hours-underemployment, being a prevalent type of precarious employment, as major labour market hardships. Specifically, it proposes that (i) unemployment has long-run welfare consequences that can be observed internationally and that (ii) hours-underemployment is an important determinant of psychological well-being both contemporarily and in the long run. Further, it is important to recognise that employment outcomes and psychological well-being may be mutually defined. The third aim of the thesis is therefore to explore whether prelabour market psychological health predicts employment difficulties, namely unemployment, across life. Three individual chapters explore these distinct research objectives. Chapter 3 studies the long-term psychological effects of past unemployment across 14 European countries, using a cross-national, longitudinal survey. Past unemployment is shown to predict reduced satisfaction with life and quality of life after the age of 50, after controlling for the influence of country-specific passive labour market policies and macro-economic conditions. Overall, evidence is uncovered that unemployment psychological scarring is a broad, cross-country phenomenon. Chapter 4 sheds new light on the hitherto largely neglected well-being effects of hours-underemployment. Using samples drawn from nationally representative British surveys, it shows that working part-time while preferring to work more hours is substantially associated with elevated psychologicall distress contemporarily, after adjusting for socio-economic confounding characteristics. Moreover, transitions from full-time employment to hours-underemployment appear to predict increased distress over long time intervals, after controlling for unobserved individual heterogeneity. Finally, chapter 5 explores the impact of adolescent mental health on adult unemployment. Using a sample of Swedish males, objective diagnoses of specific subtypes of mental health conditions appear to predict prolonged time spent in unemployment over lifelong labour market trajectories, after adjusting for common family characteristics shared among siblings. Additionally, the long-term unemployment impact of adolescent mental ill-health appears to be magnified during the period following the 1990s Swedish crisis, suggesting that workers with poor mental health may bear disproportionately high economic burdens during recessions. Taken together, these studies highlight the importance of two types of interventions: (i) short-term activation programmes designed to compensate for well-being losses among unemployed and underemployed workers and (ii) long-term preventative interventions aiming to enhance psychological well-being even prior to labour market entry.