Remaining in employment leads to stability in resources and well-being, a German study finds

Maria Pavlova, Professor of Psychological Gerontology at the University of Vechta, published a large-scale study that contrasts the effects of uninterrupted employment with those of long-term unemployment. Surprisingly, the study showed that in Germany, neither the benefits of remaining in employment nor the losses during long-term unemployment are too impressive.  

The study draws on 28 yearly observations from the German Socio-Economic Panel (SOEP), the largest nationally representative survey in Germany. The SOEP is conducted yearly by DIW Berlin. Maria Pavlova analyzed the data from 1985-2012 using a complex statistical procedure (longitudinal multilevel analysis), which enables estimation of true change over time (as opposed to stable differences between persons).

Over years, stably employed workers enjoyed a high stability in resources, such as income or availability of social support, and in well-being. By contrast, continuously unemployed workers experienced resource loss. However, this was mostly limited to the economic domain: Expectedly, long-term unemployment led to income losses, growing financial worries, and plummeting chances in the labor market. Besides, the longer they stayed unemployed, the more often individuals felt that they would have no one to turn to in case of emergency. Nevertheless, the initial negative effects of job loss on resources and subjective well-being were considerably stronger than the subsequent losses during prolonged unemployment.

There were small but interesting differences among employed workers. First, it was a bit more beneficial to change jobs than to remain with the same employer – for instance, in terms of subjectively estimated chances in the labor market, feelings of control over one’s life and future optimism. Second, younger workers, women, and (unsurprisingly) people with a higher socioeconomic status benefited from uninterrupted employment more. Notably, with the passage of time, older workers rated their chances in the labor market increasingly poorly, and this despite uninterrupted employment.

It is no news that long-term unemployment is a bad thing and should be dealt with, Maria Pavlova says. However, she wonders why workers who remain employed without interruptions do not gain more, be it in terms of income or well-being. It may be something special about the strongly regulated German labor market that offers good employment protection to most workers but few opportunities to change jobs, not to mention occupations, especially in the second half of the working life. If uninterrupted employment is desirable, policy makers and employers should give more thought to incentives – opportunities for professional and personal growth at the workplace. And it would be great to have them for all workers, irrespective of age.

As the pandemic and the measures to fight it have brought turmoil to the labor market, finding employment gaps to have apparently few negative consequences for workers may seem reassuring. Maria Pavlova points out, however, that the pandemic produces much more uncertainty than typical employment gaps can ever give rise to. Thus, her findings can give no reassurance in the current situation.

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0261794

Pavlova, M. K. (2021). Do workers accumulate resources during continuous employment and lose them during unemployment, and what does that mean for their subjective well-being? PLOS ONE, 16(12), e0261794. https://doi.org/10.1371/journal.pone.0261794