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October 04, 2011



"This hints at an important point. There’s a trade-off between a flexible labour market, in which there are high rates of job loss and creation, and personal well-being. You can’t have both."

In other Unpleasant-Signs-of-Ursine-Behaviour-in-the Forest-type-news, people value job security becasue it allows them to plan their lives which, in general, are more important to them than their jobs.


Or maybe cause and effect work the other way. Those who lose a job remain unscarred by it retain control of their destiny and find it easier to get another job. You often point out confidence is a self-fulfilling prophesy. I lost several jobs over the course of 3 years. Each time the job hunting machine I cranked up became slicker.

Those who despair, are lost.


nice piece - only I wonder if there's a significant variable that you and to some extent Maening and Wilhelm miss out. That is to say, it may not be the fact of losing one's job that determines how steep the loss of wellbeing is, but rather the disastrous consequences of losing all income and having to rely on paltry State handouts, possibly losing one's home and being cut out from the consumer society.

In other words, I wonder if the asymmetry holds in say Denmark, where their welfare State implements the principles of Flexicirity - arguably the most flexible labour market with large turnover in jobs and scant employment rights in the classical sense, but backed up by the security of knowing that losing one's job need not mean losing everything because of the generous retraining programmes and adequate benefits the State gives.

So could you in fact have the significant rates of job turnover allied to high wellbeing if publiv policy mitigated the worst effects of being unemployed and reduced the period of time one was without work?



@Prateekbuch - thanks.
This slightly dated paper suggests that the longer-term unemployed do suffer loss of wellbeing in Denmark - but this is due to the loss of income (and perhaps social isolation) rather than from unemployment itself:

Philip Walker

"There’s a trade-off between a flexible labour market and personal well-being."

At one level, clearly. But one shouldn't press this to conclude that flexible labour markets are bad for well-being, surely.

For consider a perfectly sclerotic jobs market, in which no-one with a job loses theirs but in which no-one without a job gains one. Now break the sclerosis at the margin, by firing someone and hiring a different unemployed person in their place. The overall level of employment is maintained, but overall happiness decreases.

Consequently we must conclude that it is not the case that specifically flexible labour markets and personal well-being are mutually exclusive, even weakly; it is that any disemployment is not conducive to personal well-being.

One may cavil that disemployment happens at a higher frequency in flexible labour markets. But the period of unemployment is shorter. I expect someone has done the study, but one should hardly need it to observe that, ceteris paribus, prolonged periods of unemployment are more disheartening than shorter ones.

To reach the conclusion I suggest is impossible, one would have to be sure that for a flexible labour market, the decrease in duration-related unhappiness did not outweigh the increase in disemployment-related unhappiness. I don't think I could comfortably state that.


Are all these numbers adjusted for 'being several months or years older and grumpier'?


A couple of points:

1) It's Morrisey. There's just about nothing in the world that doesn't make him miserable. The lyric could just as easily have been "I saw a cute puppy chasing a stick, and heaven knows I'm miserable now."

2) What's true under current conditions is not necessarily universally true. It might well be that you can break each change of happiness into two parts: the effect of the new state (i.e. has/does not have a job) and the effect of change itself (i.e. the upsetting of the normal routine of life - the stress of unfamiliarity).

Putting in some arbitrary numbers, let's say that losing your job subtracts 15 "happiness points" from your total score, and getting a job adds 5. This would be broadly consistent with the results cited. Splitting these numbers as above, we could assign a score of 10 to the value of having a job over not having a job, and a score of -5 to the effect of change. Thus losing your job is expressed as -10 -5 = -15, whereas gaining a job is +10 - 5 = +5.

The key point is that that -5 is not necessarily a constant. It should be a figure subject to declining marginal returns; the more often you change jobs, the less stressful the process is for you. So in the long run that -5 might turn into a more manageable -2.

And if the effect of high turnover in the long term is lower unemployment, you've got a lot of +10s floating around to make up for those -2s. It's an open question as to whether on balance this would produce overall level of happiness higher or lower than what we're experiencing at the moment; at the very least though, it can't be said that high job turnover and happiness are necessarily mutually exclusive.

Storage Letchworth

Self image and happiness are perhaps bizarrely not the same thing. Being in a job you do not particularly enjoy is never going to make you happy but you comply with society's norms and you have self worth. Losing a job, even if it is redundancy and "not your fault", is a serious slap in the face. We all want to feel wanted and this is the ultimate statement that you are unwanted. No big surprise that Messrs Maennig and Wilhelm show it as having 5 - 10 times more impact than gaining a job.
Gaining a new job often only serves to remind people that they never particularly liked the work in the first place.


"Gaining a new job often only serves to remind people that they never particularly liked the work in the first place."


But not all jobs give one self-worth. Walking out of a job in which one is under-employed or exploited feels goooooood. Hanging on to that feeling is difficult but can be done, especially if you can bump up your self-worth by doing unpaid, but much more challenging, work than you were doing before.

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