Unemployment and subjective well-being among the youth: evidence from a longitudinal study in Poland

Abstract

The main aim of this paper is to investigate the impact of becoming unemployed on the well-being of young people. Particularly, we examine to what extent this relationship is moderated by the local unemployment rate. To address this topic, we use the Polish longitudinal dataset: Social Diagnosis: Objective and Subjective Quality of Life in Poland (2005-2015). Using a fixed effect model, we find that young individuals who lost a job feel worse off than their counterparts who remained employed, and that these effects differ by gender, with men being more susceptible to changes in the employment status. Moreover, we show that the impact of unemployment on the well-being of men is the smaller the higher the unemployment rate is. However, contrary to expectations, this effect is driven by the decreasing well-being of employed men and not by a decline in the distress level of unemployed men when aggregate unemployment grows.