Exploring the Effect of Unemployment on Attitude Towards the Future for the European Aging Workforce

The main challenge with the extant literature on the relationship between unemployment and attitudinal outcomes, such as welfare attitudes, is that most studies use a cross-sectional design, which does not allow for the estimation of causal effects. Although there are few longitudinal studies, most are country-specific and do not allow for an understanding of the role of institutional settings in mitigating the impact of unemployment on attitudinal outcomes. To fill this gap in the literature, we investigated whether unemployment affects older workers' attitudes toward the future. And how does this association vary across European welfare regimes?

In a longitudinal research design, we used six waves (4,5,6,7,8,9) of the Survey of Health, Ageing, and Retirement in Europe with 27 European countries plus Israel gathered in five welfare regimes. In the total sample of 36533 observations, 4% has been treated or experienced the transition from employment to unemployment. To handle heterogeneity between older people, we use propensity score matching and, specifically, the method of the nearest neighbour to find a match for the treated with respect to gender, age, education level and health status in order to estimate the average treatment effect of the treated.

The results suggest that experience of unemployment decreases optimistic view of the future by 0.10 on average in the total sample. However the effect of unemployment on attitudes differs across welfare regimes with no significant impact in social democratic regimes. Meanwhile, the most substantial effect is found in the Southern-Mediterranean regime. The comparison across welfare regimes sheds light on the dynamic relationship between individuals' view of the future and institutional context in Europe. However, dividing the sample into five sub-samples for stratified analysis by welfare regimes raised some challenges related to the sample size.