The scarring effect of unemployment from the early '90s to the great recession

a research paper [No. 2015-05 March 2015] by Alberto Tumino for (Institute for Social and Economic Research, University of Essex)

Abstract

This paper addresses two issues of great importance in the current economic climate.

First, it analyses the extent to which unemployment experiences have a scarring effect on British men during the Great Recession.
Second, it provides an insight into the relation between true state dependence and the business cycle by investigating the role of local unemployment in affecting the persistence of unemployment incidence and by analysing the dynamics of unemployment scarring in the last two decades.

Our results support the presence of true state dependence both during the Great Recession and in the other two sub-periods analysed, the early 90s and early 2000s.

Moreover, we find evidence of a negative association between the scarring effect of unemployment and the business cycle. From a policy perspective, our findings imply that public interventions aimed at alleviating unemployment in the short term are also likely to have beneficial effects on longer term unemployment, especially during downturns.

JEL codes: J64, J60, J01, R23

Full text (PDF 44pp)

---

The Transferable Scars: A Longitudinal Evidence of Psychological Impact of Past Parental Unemployment on Adolescents in the United Kingdom

CEP Discussion Paper No 1165 by Nattavudh Powdthavee and James Vernoit (Centre for Economic Performance, London School of Economics) published September 2012

Abstract

Using a longitudinal data of British youths, this paper explores the consequences of past parental unemployment on the current happiness and self-esteem of the children.

We find that a past unemployment spell of the father has important consequences for their children and leads to them having both lower subjective well-being and self-confidence.

In addition, this paper also presents evidence that both subjective well-being and self-confidence responds differently to maternal unemployment compared to paternal unemployment.

In our final table, we show changes in adolescents’ well-being and self-esteem predicts educational attainments at 16. Together these findings offer new evidence of unemployment scarring on children’s livelihood.

JEL Classifications: D1, I3, J6

Full text (PDF 43pp)

---