Job Loss and Its Consequences on the Individual's Subjective Well-Being: How Important Is Leisure?

The resources and benefits linked to employment are manifold. Employed persons do not only profit from income, but also from important non-material benefits like a structured life and level of activity, a sense of belonging, creating identity, providing social contacts, prestige and social approval. On the contrary, unemployed individuals especially suffer from the absence of these non-material benefits and, hence, are less satisfied than the employed. Although numerous previous studies already have investigated the link between job loss and the individual’s subjective well-being, the consequences of unemployment for specific life domains, such as leisure, are far from settled.

This paper aims to dig deeper into the relationship between unemployment and the individual’s subjective well-being by specifically investigating the impact of unemployment onto the individual’s free time activities. Using the longitudinal data of the German Socio-Economic Panel (SOEP; 1984-2013) and applying fixed-effects regression models, this paper investigate firstly, if time use for free time activities and the engagement in different specific forms of social participation, such as voluntary, political and cultural activities as well as sports, changes when people become unemployed. Secondly, the paper asks whether those changes mediate the negative impact of unemployment onto the individual’s life satisfaction.

Results show that people spend on average more time on free time activities and, therefore, are more satisfied with their leisure when becoming unemployed. However, this does not seem to affect the life satisfaction of the unemployed. Looking at specific activities, and hence, specific forms of social integration, results highlight that if unemployment causes less participation life satisfaction decreased even more.