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Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk
Author(s) -
KNABE ANDREAS,
RÄTZEL STEFFEN
Publication year - 2011
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2009.00816.x
Subject(s) - unemployment , terminology , economics , labour economics , psychology , economic growth , linguistics , philosophy
We reassess the ‘scarring’ hypothesis which states that unemployment experienced in the past reduces a person's current life satisfaction even after the person has become reemployed. Our results suggest that the scar from past unemployment operates via worsened expectations of becoming unemployed in the future, and that it is future insecurity that makes people unhappy. Hence the terminology should be altered by one letter: past unemployment ‘scars’ because it ‘scares’.