01 Jul 2004

The Impact of Unemployment on Individual Well-Being in the EU

Namkee Ahn / Juan Ramón García / Juan F. Jimeno

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European Network of Economic Policy Research Institutes (ENEPRI) Working Paper No. 29, 23 pages

Among the working-age population, one of the most damaging individual experiences is unemployment. Many previous studies have confirmed the devastating effects of unemployment on individual well-being, both pecuniary and non-pecuniary. Using the data from the European Community Household Panel survey, this paper examines the factors that affect unemployed workers’ well-being with respect to their situations in their main vocational activity, income, housing, leisure time and health in Europe. The research finds that unemployment substantially reduces an individual’s satisfaction levels with his or her main vocational activity and finance, while it greatly increases his or her satisfaction levels with leisure time. With respect to health, it has a small negative effect. Unemployment duration also has a small, negative impact on individual well-being, suggesting that unemployment has a lasting and aggravating effect throughout the spells of unemployment, contradicting the theory of adaptation.