Premium
Measuring the Cost of the Fear of Unemployment: An Information Approach
Author(s) -
Leslie Derek,
Blackaby David
Publication year - 1999
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/1467-9914.00104
Subject(s) - unemployment , recession , economics , measure (data warehouse) , neglect , perspective (graphical) , great recession , econometrics , keynesian economics , macroeconomics , computer science , psychology , database , artificial intelligence , psychiatry
A method of measuring the insecurity costs of unemployment or what might be termed the fear of unemployment effect is proposed. The approach is from an individual perspective and builds on a cost measure first suggested by Lucas. The measure is designed to abstract away from any output losses that might be incurred in a recession. The latter is the traditional Keynesian way of measuring recession costs. The paper demonstrates the intuitively sensible properties of the measure and argues that to neglect the fear of unemployment effect as is done with standard Keynesian cost measures could seriously underestimate recession costs for some individual types. The paper concludes with a multiperiod simulation of the insecurity cost measure.