Well-Being of Displaced Workers after Reemployment. Survey Evidence from Switzerland's Manufacturing Sector

Employment fulfills some of individuals’ fundamental needs such as regular activity or social contacts and provides them with a social identity. As a consequence, if workers loose their job, their well-being is likely to be substantially affected. This leads us to the question whether workers are able to regain their former level of life satisfaction when reemployed.

Previous research has shown that this may not be the case for all workers. It has been assumed that the quality of the new job plays a paramount role in how displaced workers experience the transition into reemployment. In this paper, we investigate how job loss in the aftermath of the Great Recession affects workers’ subjective well-being and whether there are increasing inequalities in life satisfaction among former colleagues.

Our paper is based on a survey of 1200 workers displaced from Switzerland’s manufacturing sector in 2009. The workers were surveyed two years after their job loss which enable us to study their occupational transitions. The design of the study tackles potential bias by surveying the entire workforce of companies that closed down completely and by combining survey data with data from the unemployment insurance register.

We find that those workers who were reemployed at the moment of the survey are on average much happier than the still unemployed. But there are substantial differences among the reemployed and not all individuals were able to regain their former level of life satisfaction. We show that some aspects of the job quality explain these differences better than others. However, job quality alone does not explain the entire variation; other factors such as changes in workers’ social relations or health conditions also seem to influence the unequal consequences of the Great Recession for workers affected by job displacement.