Unemployment's long shadow: The persistent impact on social exclusion

Pohlan, Lau a
A icle
Unemploymen 's long shadow: The pe sis en impac on
social exclusion
Jou nal o Labou Ma ke Resea ch
P o ided in Coope a ion wi h:
Ins i u e o Employmen Resea ch (IAB)
Sugges ed Ci a ion: Pohlan, Lau a (2024) : Unemploymen 's long shadow: The pe sis en impac on
social exclusion, Jou nal o Labou Ma ke Resea ch, ISSN 2510-5027, Sp inge , Heidelbe g, Vol. 58,
Iss. 1, pp. 1-16,
h ps://doi.o g/10.1186/s12651-024-00369-8
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Jou nal o Labou Ma ke Resea ch
Unemploymen ’s long shadow:
hepe sis en impac onsocial exclusion
Lau a Pohlan1,2,3,4*
Abs ac
This pape s udies he long- e m consequences o unemploymen on di e en dimensions o social exclusion.
Based on longi udinal linked su ey and adminis a i e da a om Ge many and an e en s udy analysis combined
wi h in e se p opensi y sco e weigh ing, I documen ha becoming unemployed has las ing ad e se e ec s
on bo h indi iduals’ ma e ial well-being and hei subjec i e pe cep ion o social s a us and in eg a ion, pe sis -
ing e en a e ou yea s. An examina ion o e ec he e ogenei y unde sco es ha he endu ing e ec s o job loss
a e mo e p onounced o indi iduals con on ed wi h challenging labo ma ke condi ions, hose wi h a his o y
o epea ed unemploymen , and indi iduals wi h lowe le els o educa ional a ainmen .
Keywo ds Unemploymen , Social exclusion, Panel da a, E en s udy, In e se p obabili y weigh ing
JEL Classi ica ion I31, J64
1 In oduc ion
Job loss o en esul s in a signi ican educ ion in he
economic and social well-being o indi iduals and hei
amilies, wi h ad e se impac s on oppo uni ies o social
inclusion. Nume ous s udies ha e es ablished ha unem-
ploymen is associa ed wi h bo h physical and men al
heal h issues (see, e.g., Cygan-Rehm e al. 2017; S aude
2019) and ha unemploymen diminishes o e all li e sa -
is ac ion (Suppa 2021a, o example, p o ides an o e -
iew). Fu he mo e, losing employmen inc eases he isk
o social exclusion and ma ginaliza ion, as documen ed
by s udies ocusing on speci ic dimensions o social inclu-
sion such as ma e ial s anda ds o li ing, social ela ion-
ships, social pa icipa ion and he sense o belonging
o socie y (see, e.g., Gunde and Hohendanne 2014;
Dieckho and Gash 2015; Ch is oph and Lie zmann
2016; Kunze and Suppa 2017).
The exis ing esea ch li e a u e poin s o a nega i e
associa ion be ween unemploymen and a ious aspec s
o social in eg a ion. Howe e , he li e a u e su e s
om wo blind spo s. Fi s ly, hese s udies ocus on sin-
gle dimensions only. Secondly, i is o en no possible o
de ini i ely es ablish whe he he obse ed social exclu-
sion among he unemployed can be a ibu ed solely
o unemploymen . Pohlan (2019) examines he e ec s
o job loss on mul iple dimensions o social exclusion.
Based on Ge man linked su ey and adminis a i e da a
and a combined in e se p opensi y sco e weigh ing and
di e ence-in-di e ences app oach, he au ho inds ha
unemploymen has pa icula ly de imen al e ec s on
he subjec i e pe cep ion o social in eg a ion, access
o economic esou ces, and an indi idual’s well-being.
Becoming unemployed also impedes he sa is ac ion o
psychosocial needs ypically associa ed wi h employ-
men , such as social s a us and enhanced sel -e icacy.
Howe e , Pohlan (2019) only conside s he e ec s o a
maximum du a ion o one yea in unemploymen . In his
pape , I shed ligh on he long- e m impac o job loss on
*Co espondence:
Lau a Pohlan
Lau a.P[email p o ec ed]
1 Ins i u e o Employmen Resea ch (IAB), Regensbu ge S asse 104,
D-90478 Nu embe g, Ge many
2 IZA – Ins i u e o Labo Economics, Bonn, Ge many
3 ZEW – Leibniz Cen e o Eu opean Economic Resea ch, Mannheim,
Ge many
4 Labo and Socio-Economic Resea ch Cen e (LASER), Nu embe g,
Ge many
12 Page 2 o 16
L.Pohlan
di e en dimensions o social exclusion, as well as he
he e ogenei y o hese e ec s dependen on labo ma ke
condi ions and indi idual esou ces.1
On he one hand, he ma e ial and social e ec s o
unemploymen may in ensi y he longe he pe iod o
unemploymen las s, as s ess ac o s such as inancial
p essu e, unsuccess ul job applica ions, and psychoso-
cial de ici s migh accumula e o e ex ended pe iods o
joblessness (Paul and Mose 2009).2 On he o he hand,
i could also be he case ha unemployed indi iduals ge
used o hei si ua ion, leading o a educ ion in he mag-
ni ude o hese e ec s o e ime. Howe e , he empi i-
cal li e a u e on subjec i e well-being sugges s li le o
no habi ua ion o unemploymen (see, e.g., Cla k e al.
2008). Ul ima ely, some people will also ind a job again
o e ime, which could p e en and coun e ac he p o-
cess o social exclusion.
The well-being li e a u e gene ally shows ha eem-
ploymen imp o es subjec i e well-being. Howe e , he
ex en o imp o emen emains ambiguous, as se e al
la ge-scale longi udinal s udies ha e ound e idence o
long- e m sca ing e ec s o unemploymen , i.e. nega i e
e ec s ha pe sis e en a e e u ning o wo k (see, e.g.,
Cla k e al. 2001; Lucas e al. 2004; Young 2012; Mous e i
e al. 2018; Ebe l e al. 2023).3
How e ec i ely eemploymen can heal hese sca s
should depend, no leas , on he quali y o wo king and
employmen condi ions (Gunde and Hohendanne
2014). In pa icula , long pe iods o unemploymen can
esul in uns able employmen ela ionships as well as
subs an ial and pe sis en wage declines in he u u e
(e.g., A ulampalam 2001; Böheim and Taylo 2002; Gangl
2006; Jos 2022). Mo eo e , unemploymen may no only
lea e inancial sca s bu also non-pecunia y sca s, as
he loss o a job can lead o inc eased eelings o u u e
unce ain y as well as lowe job secu i y, wo k quali y and
job sa is ac ion (e.g., Dieckho 2011; Young 2012; B and
2015; He schko e al. 2019).
The con ibu ion o his pape o he li e a u e is h ee-
old. Fi s ly, his pape p o ides a ca e ul analysis o he
long- e m impac o unemploymen on se e al dimen-
sions o social exclusion based on he mos ecen e sion
o he PASS-ADIAB, which links 15 wa es o panel su ey
da a wi h adminis a i e da a om he Ge man Fede al
Employmen Agency. This allows me o d aw conclusions
abou which aspec s o social exclusion - access o ma e-
ial esou ces, social engagemen , and a pe son’s subjec-
i e pe cep ion o social in eg a ion and social s a us - a e
mos a ec ed by unemploymen and which eco e mo e
quickly han o he s. Secondly, I del e in o mechanisms
by examining he he e ogenei y o hese e ec s, depend-
en on u u e employmen s a us, gene al labo ma ke
condi ions, and indi idual esou ces. Thi dly, his pape
me hodologically ex ends p e ious s udies by apply-
ing a combina ion o in e se p opensi y sco e weigh -
ing and e en s udy analysis, inc easing he eliabili y o
he esul s by making wo ke s who become unemployed
compa able o wo ke s who emain employed ac oss
many dimensions, including indi idual labo ma ke
his o ies. In his way, I ge as close as possible o de e -
mining he causal long- e m e ec o unemploymen on
social exclusion wi hou elying on exogenous a ia ion.
In his pape , I ack indi iduals o up o ou yea s
a e becoming unemployed and show ha unemploy-
men has long-las ing e ec s on di e en dimensions o
social exclusion. In e ms o ma e ial esou ces, he ind-
ings e eal a subs an ial decline in disposable household
income, which amoun s o 20 pe cen a e one yea and
dec eases o 13 pe cen a e ou yea s. This igh e
inancial si ua ion is u he mani es ed in he de e io a-
ion o li ing s anda ds among indi iduals who expe i-
enced job loss. They su e om an endu ing dep i a ion
o basic goods and ac i i ies.
These economic cons ain s, in u n, also impac he
oppo uni ies a ailable o indi iduals o pa icipa ing
in social and cul u al ac i i ies. As a consequence, indi-
iduals end o o go ela i ely cos ly ac i i ies such as
dining ou a es au an s, a ending cinema o hea e
e en s. In e es ingly, he e a e no obse able changes
in hei membe ships in social o ganiza ions like clubs
o e he cou se o he obse a ion pe iod. These indings
a e consis en wi h Kunze and Suppa (2017), who docu-
men s ong and las ing e ec s o unemploymen on he
a endance o cul u al e en s, cinema, and pop conce s,
bu no e ec s on ac i e pa icipa ion in spo s o olun-
a y wo k. The au ho s e en ind a posi i e long- e m
e ec on helping iends and neighbou s. Röze e  al.
(2020) also show ha some dimensions o social ne -
wo ks, such as con ac wi h ela i es o neighbo s, may
ac ually imp o e wi h longe pe iods o unemploymen
while suppo om acquain ances, including colleagues,
sys ema ically declines as a esul o sho - and long- e m
unemploymen .
Rega ding subjec i e assessmen s o social s a us and
social in eg a ion, I ind ha expe iencing unemploymen
1 I conside ansi ions om employmen o unemploymen ega dless o
he eason. The e o e, he e m “job loss” e e s o bo h olun a y and in ol-
un a y e mina ion o employmen and is used in e changeably wi h “job
e mina ion” and “becoming unemployed”. In a sensi i i y analysis, howe e ,
I ocus exclusi ely on in olun a y job e mina ion.
2 In Ge many, unemployed indi iduals ypically ecei e insu ance-based
unemploymen bene i s equi alen o 60% (67% o claiman s wi h child en)
o hei p e ious ne sala y o a pe iod o 12 mon hs. A e he expi a ion
o insu ance-based bene i s, needy indi iduals ecei e means- es ed ben-
e i s, which can lead o a conside able educ ion in paymen s.
3 None heless, a ew s udies in his ield a e ques ioning he sca ing
hypo hesis (such as Rau 2021 o Zhou e al. 2019).
Page 3 o 16 12 Unemploymen ’s long shadow: hepe sis en impac onsocial exclusion
signi ican ly educes indi iduals’ pe cei ed social s a us
and hei sense o belonging o socie y. While he impac
on social s a us and social in eg a ion diminishes o e
ime, hese e ec s pe sis e en ou yea s a e becom-
ing unemployed. No ably, du ing his ou -yea pe iod,
a subs an ial p opo ion o indi iduals inds a job again.
Howe e , despi e an inc easing p obabili y o eemploy-
men o e ime, he esul s indica e ha unemploymen
lea es las ing sca s.
When examining e ec he e ogenei y by ca ego izing
indi iduals based on hei p ospec s o eemploymen
and hei esou ces o cope wi h unemploymen , I show
ha he long-las ing impac s o job loss a e ampli ied o
indi iduals who ace challenging labo ma ke condi-
ions, ha e mo e expe ience wi h unemploymen pe iods,
and ha e lowe le els o educa ional a ainmen . In sum-
ma y, his pape unde sco es he impo ance o adop ing
a nuanced pe spec i e on social exclusion, one ha akes
in o accoun he mul i ace ed na u e o he expe ience
and i s endu ing consequences.
The es o he pape is s uc u ed as ollows. Sec ion2
p esen s heo e ical conside a ions ega ding he concep
o social exclusion and he consequences o unemploy-
men . Sec ion3 desc ibes he da a and he measu emen
o he ou come a iables. Sec ion4 p esen s he empi i-
cal iden i ica ion s a egy. Sec ion5 desc ibes he sam-
ple, and shows model diagnos ics. Sec ion6 p esen s he
esul s o he empi ical analysis. Sec ion7 concludes.
2 Theo e ical conside a ions
The concep s o social inclusion and i s coun e pa ,
social exclusion, a e no uni o mly de ined (Room 1995;
K onaue 1998; Ba elheime 2004; Eu opean Com-
mission 2010; Ba elheime e  al. 2020). De ini ions
employed in wel a e esea ch and wi hin poli ical con-
ex s may display some no able dis inc ions, ye hey also
sha e ce ain co e elemen s. G ounded in he no ion o
oppo uni y ealiza ion, he measu emen o in eg a ion
oppo uni ies is based on an indi idual’s capaci y o pu -
sue a pe sonally desi ed and socially accep ed way o li e
(Ba elheime 2004). Realized social inclusion depends
on bo h an indi idual’s capabili y o ac and an indi id-
ual’s ac ual ac ions (Sen 1985), necessi a ing indi iduals,
wi hin he con ex o pe sonal and socie al cons ain s, o
ac i ely shape hei li es in a sel -de e mined manne .
Social exclusion is a complex, mul idimensional p o-
cess ha un olds ac oss a ious dimensions o socie y,
including educa ion, employmen , heal hca e, social
se ices, poli ical ins i u ions, and in e pe sonal ela-
ionships. Wi hin his amewo k, in e ela ed o ms o
pa icipa ion, encompassing ma e ial, social, cul u al,
and legal-ins i u ional dimensions can be disce ned. This
pape p edominan ly concen a es on ma e ial and social
in eg a ion, which mani es pa icula ly in access o
inancial esou ces, s anda ds o li ing, and engagemen
in social in e ac ions wi h o he s.
In mode n wo king socie ies, he chance o social in e-
g a ion is o a la ge ex en de e mined by in eg a ion in o
wo king li e (P ombe ge 2008). Gain ul employmen
no only g an s access o ma e ial esou ces, a i al p e-
equisi e o pa icipa ion in social and cul u al li e, bu
i also ul ills undamen al psychosocial needs (Jahoda
1981). These include main aining a egula daily ou ine,
social con ac s beyond one’s immedia e amily, engaging
in meaning ul ac i i ies aligned wi h collec i e objec i es,
and ob aining socially ecognized s a us. Th ough i s
mul i ace ed unc ions, gain ul employmen signi ican ly
shapes indi iduals’ pe cep ions o hei abili y o manage
hei li es.
Gi en ha job loss esul s in he o ei u e o unc-
ions ha acili a e pa icipa ion and may no always be
adequa ely compensa ed in o he li e domains, unem-
ploymen is ega ded as a majo isk ac o o social
exclusion. Job loss and he esul ing loss o ea ned
income di ec ly a ec a household’s a ailable inancial
esou ces. Howe e , his loss can be mi iga ed by al e -
na i e sou ces o income, such as unemploymen bene i s
o social secu i y bene i s. In addi ion, o he household
membe s migh compensa e he income loss by aking up
a job o inc easing wo king hou s, o sa ings a e ouched
so ha becoming unemployed does no immedia ely
ansla e in o a educ ion in he s anda d o li ing o an
inc ease in dep i a ion. The ex en and manne in which
he s anda d o li ing is a ec ed depends on a ious ac-
o s, including he deg ee o inancial cons ain s and he
du a ion o unemploymen .
In eg a ion in o social ela ionships and o ganiza ions,
o en os e ed by gain ul employmen , holds a pi o al
ole in acili a ing social pa icipa ion. Wo k en i on-
men s equen ly se e as he b eeding g ound o social
connec ions and ne wo ks, which may ex end o pe -
sonal acquain ances and iendships. Addi ionally, hose
in employmen a e gene ally be e posi ioned han he
unemployed o sus ain social ela ionships and engage
in clubs o o ganiza ions. This ad an age s ems om a
combina ion o ha ing mo e inancial esou ces o social
ac i i ies and he posi i e impac ha gain ul employ-
men can ha e on sel -es eem and sel -e icacy expec a-
ions (Tisch and Wol 2015).
Fu he mo e, in wo king socie ies, indi idual’s
employmen s a us la gely de ines hei social s a us
(Jahoda 1981; Paul and Ba inic 2010). Gain ul employ-
men ep esen s a widely ecognized social no m
o people o wo king age. In he absence o socially
acknowledged al e na i e oles, such as child- ea ing
o ca egi ing esponsibili ies, economic inac i i y is
12 Page 4 o 16
L.Pohlan
gene ally conside ed less p es igious han employmen .
Consequen ly, he iola ion o he no m can be pe cei ed
as a pe sonal se back by he unemployed hemsel es and
by hose a ound hem, po en ially leading o psychologi-
cal dis ess and eelings o social exclusion. This shows
ha pe cei ed social s a us encompasses mo e han jus
objec i e aspec s such as ea nings and occupa ional p es-
ige. Fo example, adhe ence o social no ms, con ibu-
ion o collec i e goals and he use o indi idual skills can
also play an in luen ial ole.
Thus, he long- e m consequences o job loss on social
exclusion la gely hinge on he p ospec s o eemploy-
men . Long- e m unemploymen , in pa icula , can exac-
e ba e sho comings in social pa icipa ion alongside
ma e ial cons ain s, as a sus ained dec ease in li ing
s anda ds also inhibi s engagemen in social and cul u al
ac i i ies. This si ua ion can u he de e io a e due o
he nega i e impac on sel -es eem and e ec s on men al
and physical heal h.
This pape p o ides a comp ehensi e examina ion
o he long- e m consequences o unemploymen on
social exclusion, employing a ange o ele an indica-
o s. I examine how job loss a ec s indi iduals’ inancial
esou ces and li ing s anda ds, as well as hei social pa -
icipa ion. In addi ion o objec i e me ics, his s udy also
explo es how indi iduals sel -e alua e hei socie al in e-
g a ion and social s a us a e becoming unemployed.
3 Da a andmeasu emen o ou comes
3.1 Da a sou ce andsample selec ion
The PASS-ADIAB links he Panel Labo Ma ke and
Social Secu i y (PASS) su ey wi h adminis a i e pe -
sonal in o ma ion om he In eg a ed Employmen
Biog aphies (IEB) o he Ge man Fede al Employmen
Agency.4 In he PASS su ey, which has been unning
since 2006, indi iduals li ing in Ge many and hei
households a e epea edly su eyed a annual in e -
als abou hei economic and social li ing condi ions,
whe eby households ecei ing wel a e bene i s a e
o e sampled (T appmann e  al. 2019). Po e y, bene i
eceip , and ansi ions in o and ou o unemploymen
a e he main ocus o he su ey.
In addi ion o objec i e indica o s used o delinea e li -
ing condi ions, he PASS su ey also inco po a es in o -
ma ion on how esponden s subjec i ely e alua e hei
ma e ial and social ci cums ances, as well as hei o e all
well-being. The PASS su ey is pa icula ly sui ed o he
p esen analysis o se e al easons. Fi s ly, he PASS da a
inco po a es in o ma ion on access o ma e ial esou ces,
social engagemen and a pe son’s subjec i e pe cep ion
o social in eg a ion and social s a us, which se e as my
ou come a iables. Secondly, by consis ing o equal pa s
d awing om long- e m unemployed indi iduals and a
s a i ied sample o he Ge man popula ion, he PASS is
ideally sui ed o in es iga e he impac o unemploymen
on social exclusion, as I obse e many ansi ions in and
ou o unemploymen . Thi dly, he PASS can be linked o
he adminis a i e da a o he Ge man Fede al Employ-
men Agency.
The eby, he da a a e en iched wi h daily in o ma-
ion on indi iduals’ employmen his o ies, pa icula ly
wi h ega d o he beginning and end o employmen
and unemploymen episodes.5 I use he adminis a i e
in o ma ion o measu e he employmen s a e a he
ime o he in e iew and as de e minan s o he p ob-
abili y o becoming unemployed in he p opensi y sco e
es ima ion. While su ey in o ma ion on wages and
employmen s a es migh su e om mis epo ing and
selec i i y issues (see, e.g., Pedace and Ba es 2000), he
adminis a i e da a sou ce deli e s de ailed and comple e
high-quali y da a on indi idual employmen his o ies, as
well as p e ious job cha ac e is ics, including wages and
i m-le el cha ac e is ics. The PASS-ADIAB 7520 allows
he analysis o 15 consecu i e panel wa es co e ing he
pe iod om 2007 o 2021.
This s udy ocuses on indi iduals who pa icipa ed in
he PASS su ey o a leas wo consecu i e wa es and
whose su ey da a can be success ully linked o admin-
is a i e IEB da a. I only conside indi iduals who we e
18 o 64 yea s old a he i s obse a ion poin (
=0
),
we e employed wi h non-ze o wages acco ding o he
IEB and did no ecei e unemploymen bene i s a ha
ime, and ei he ansi ioned o unemploymen ( ea -
men g oup) o emained employed (con ol g oup) by
he second obse a ion poin (
=1
). T ea ed indi iduals
a e excluded om he con ol g oup. The inal es ima-
ion sample consis s o 1,060 indi iduals in he ea men
g oup and 29,375 indi iduals in he con ol g oup.
3.2 Measu emen o ou come a iables
In he ollowing, I desc ibe how he ou come a iables
household income, dep i a ion, social engagemen ,
social s a us and social in eg a ion a e measu ed. The
PASS ques ions unde lying he ou come a iables a e
p esen ed in Appendix A.1, a desc ip ion o hei con-
s uc ion in Appendix Table A.1 and summa y s a is ics
in Appendix Table A.2.
I use wo a iables o measu e access o ma e ial
esou ces enabling a basic s anda d o li ing and social
pa icipa ion. Fi s , I use he equi alen household
4 This pape is based on he PASS-ADIAB e sion 7520 1 (DOI: 10.5164/
IAB.PASS-ADIAB7520.de.en. 1) and can be accessed ia he Resea ch Da a
Cen e (FDZ) o he IAB.
5 On a e age, o e 80% o he esponden s ag eed o me ging he wo da a
se s in each wa e (Be g e al. 2022).

Page 5 o 16 12 Unemploymen ’s long shadow: hepe sis en impac onsocial exclusion
income, which ep esen s a need-weigh ed pe capi a
mon hly income. Second, I use (weigh ed) dep i a ion
indexes. The ypical ope a ionaliza ion o ma e ial dep i-
a ion implies ha a pe son is only conside ed dep i ed
when hey canno achie e a pa icula ‘doing’ o ‘being’
because hey do no ha e he inancial esou ces (Guio
2009). The PASS-dep i a ion scale was de eloped by
he Ins i u e o Employmen Resea ch e e ing o p e-
ious su eys (e.g., he EU-SILC, he B i ish Household
Panel, and he “Nied igeinkommens-Panel”) and empi i-
cal esea ch (e.g., And eß and Lipsmeie 1995; Nolan and
Whelan 1996).
Speci ically, he households a e asked o indica e
whe he hey possess a se o basic goods conside ed
essen ial o an app op ia e s anda d o li ing. Fo
ins ance, hese i ems include, among o he s, ha ing an
apa men wi h a leas as many ooms as he e a e indi-
iduals li ing he e, su icien win e clo hing, a com-
pu e wi h in e ne access o a ca .
Mo eo e , household membe s a e asked abou hei
pa icipa ion in ac i i ies ha ul ill basic needs, such
as buying new clo hing, paying bills o sa ing a ixed
amoun o money. The ques ions also co e in ol emen
in social ac i i ies like in i ing iends o e o dinne a
home o going o he cinema once in a while. I spli he
index in o he wo dimensions, dep i a ion o goods and
dep i a ion o ac i i ies, as in pa icula in he sho - un,
becoming unemployed migh p ima ily inc ease non-
pa icipa ion in ac i i ies. The wo dep i a ion indexes
a e based on a lis o 11 goods and 12 ac i i ies, espec-
i ely.6 Su ey pa icipan s also indica ed whe he hei
households lacked hese goods o abs ained om ce ain
ac i i ies due o inancial cons ain s o o o he easons.
In o de o cons uc he dep i a ion indexes accu a ely, I
only conside i ems ha a e missing o inancial easons.
This app oach ensu es ha delibe a e choices, such as a
household op ing no o own a ca o a ele ision, a e no
misin e p e ed as indica i e o a diminished s anda d o
li ing. Finally, i ems a e weigh ed on he basis o he p o-
po ion o he popula ion ha conside s a pa icula i em
o be indispensable.
I quan i y social pa icipa ion by using in o ma ion on
he ac i i ies indi iduals engage in as pa o o ganiza-
ions o associa ions. The PASS su ey includes a ques-
ion on whe he he esponden ac i ely pa icipa es
in a ious g oups, including unions, poli ical pa ies,
chu ch communi ies, clubs, such as music, spo o
cul u e clubs, o o he o ganiza ions. Based on hei
esponses, I cons uc a a iable ha anges om 0 o 5,
indica ing how many ac i i ies he indi idual is in ol ed
in. Un o una ely, he PASS-ADIAB lacks p ecise da a on
an indi idual’s social ne wo k. The e is only in o ma ion
on he numbe o close iends (including amily mem-
be s) indi iduals ha e, which is unlikely o be a ec ed by
pe iods o unemploymen (see Pohlan 2019 and K ug and
P echsl 2020 as well as he esul s p esen ed in Figu e B.4
in he Appendix). Fo his eason, his in o ma ion is no
conside ed u he .
To measu e social s a us, I use a ques ion om he
PASS su ey whe e esponden s a e asked o ank
hemsel es on a scale o 1 o 10. A anking o 1 implies
belonging o he bo om o socie y, while a anking o 10
indica es being posi ioned a he op. A e y simila ques-
ion is included in he ISSP (In e na ional Social Su ey
P og amme), a c oss-sec ional household su ey o Eu o-
pean coun ies, and has been analyzed in s udies ocus-
ing on c oss-coun y compa isons (see, e.g., Lindemann
and Saa 2014; Poppi z 2016 and Saa e al. 2017).
To quan i y social in eg a ion, I ely on he subjec-
i e pe cep ion o social belonging, which spans om
1 o 10. This scale ep esen s a spec um om eeling
excluded (1) o expe iencing a s ong sense o belonging
and in eg a ion wi hin socie y (10). This measu e o he
o e all subjec i e e alua ion o social in eg a ion is based
on he o me IAB su ey “Lebenssi ua ion und Soziale
Siche ung” 2005 (LSS 2005). Simila measu es ha e been
used, o ins ance, by Böhnke (2004) and Lay e e  al.
(2010).
4 Empi ical iden i ica ion
The aim o his pape is o de e mine he long- e m
e ec s o unemploymen on di e en dimensions o
social exclusion o e ime. The iden i ica ion o causal
e ec s elies on a compa ison o he ou come le els o
wo ke s who become unemployed and hose o o he -
wise iden ical indi iduals who emain employed.
The undamen al challenge o causal in e ence a ises
om he inabili y o simul aneously obse e he ou -
comes o he same indi iduals bo h wi h and wi hou
job loss, making he di ec obse a ion o causal e ec s
impossible (Imbens and Woold idge 2009). To add ess
his challenge, I employ a combina ion o in e se p open-
si y sco e weigh ing (IPW) and an e en s udy app oach
(Mille 2023). The basic idea behind he weigh ing
app oach is o make hose wo ke s who do no expe i-
ence job loss compa able in hei obse ed cha ac e is ics
o hose who do expe ience job loss. This is achie ed by
downweigh ing he ou come le els o indi iduals om
6 The ac i i ies cap u ed in he dep i a ion index also pa ly add ess dep-
i a ion in social pa icipa ion. This ela es o wha is p oposed in Suppa
(2021b) as a measu e o dep i a ion in social pa icipa ion based on a se o
social ac i i ies (such as a ending cul u al e en s and mee ing iends) and
he equency wi h which hey a e pe o med. While his measu e no only
cap u es he inancial dimension bu also o he mechanisms such as he
denial o igh s, s igma iza ion, o any combina ion he eo , I ocus solely
on he dep i a ion o ac i i ies, including social ac i i ies, due o inancial
cons ain s.
12 Page 6 o 16
L.Pohlan
he con ol g oup who a e o e ep esen ed, while plac-
ing g ea e weigh on he ou come a iables o hose who
a e unde ep esen ed. These weigh s a e de e mined
based on he p opensi y sco e, o he p obabili y o being
unemployed in he subsequen pe iod (
T=1
), gi en he
obse ed co a ia es x:
I es ima e he p opensi y sco e using a logis ic eg es-
sion model based on a la ge se o de e minan s o job
loss (see Table B.2 in he Appendix).7 This se includes
in o ma ion on p io ou come le els, sociodemog aphic
cha ac e is ics, subjec i e indica o s, indi idual heal h
s a us and household si ua ion. Mo eo e , I use in o ma-
ion on indi idual employmen his o ies and p e ious
job cha ac e is ics, including i m-le el cha ac e is ics
and whe he he posi ion was pe manen o no .8 An
indi idual’s pas labo ma ke pe o mance should be
s ongly ela ed o unobse ed ac o s, such as abili y
and mo i a ion, which a e in u n likely o in luence indi-
idual employmen p ospec s and my ou come a iables.
Hence, in o ma ion on indi idual employmen his o ies
may help o iden i y he e ec s o becoming unemployed
(Heckman e al. 1997).
These obse ed cha ac e is ics a e measu ed a he
i s o wo consecu i e wa es, ensu ing ha hei le -
els emain una ec ed by u u e unemploymen . Subse-
quen ly, I use he i ed alues o he p opensi y sco es o
calcula e he weigh s.
In a second s ep, I es ima e he ollowing e en s udy model
o elimina e pe manen , ime-in a ian di e ences be ween
indi iduals ha emain unobse ed by he esea che , and
examine he e ec s o unemploymen o e ime:
whe e
yi,
is he ou come le el o indi idual i a ime ,
αi
ep esen s indi idual ixed e ec s,
Ti
he ea men
dummy aking he alue 1 i he indi idual becomes
unemployed a
=1
and 0 o he wise.
δc
cap u es calen-
da yea ixed e ec s and
εi,
is he idiosync a ic e o
e m.
τ
spans om -2 o 4, co e ing a se en-yea pe iod,
wi h poin in ime1 indica ing he s a o he ea men .
Fo a ixed poin o ime
τ
,
βτ
cap u es he a e age alue
o ou comes o he con ol g oup ela i e o he e e -
ence pe iod (condi ional on ixed e ec s), while
γτ
(1)
p(x)=P(T=1|X=x).
(2)
yi, =αi+

τ�=−1
βτI( =τ)+

τ�=−1
γτI( =τ)I(Ti=1
)
+δ
c
+ε
i
,
,
ep esen s he a e age di e ence be ween he ea men
and he con ol g oup a ha speci ic poin in ime. The
eg ession is weigh ed by he in e se p opensi y sco e
weigh s de e mined in he i s s ep and o mally gi en by
ˆ
p(xi)
1−ˆ
p(xi)
, whe e
ˆ
p(xi)
is he p edic ed p obabili y o becom-
ing unemployed condi ional on obse ed cha ac e is ics
xi
.The IPW-e en s udy app oach iden i ies
γτ
unde
he assump ion ha , in he absence o a job loss e en ,
he a e age ou comes o bo h unemployed and s ill-
employed wo ke s ollow a pa allel end. In essence,
his app oach assumes ha bo h g oups unde go simila
changes o e ime, a he han ha ing simila le els o
ou come a iables when job loss does no occu . The es i-
ma ed coe icien can hen be in e p e ed as he e ec o
unemploymen a di e en poin s in ime on he a ious
dimensions o social exclusion o unemployed indi iduals
(a e age ea men e ec on he ea ed (ATT)).
5 Desc ip i e s a is ics andmodel diagnos ics
Table1 illus a es ha he empi ical p ocedu e is necessa y
o ende he ea men and con ol g oup compa able. I
shows selec ed desc ip i e s a is ics o he cha ac e is ics
used in he analysis, sepa a ely o bo h g oups. Mean al-
ues o he con ol g oup a e p esen ed be o e (column (2))
and a e weigh ing (column (3)). Addi ional desc ip i e
s a is ics a e epo ed in Table B.1 in he Appendix.
Wi hou weigh ing, he ea men and con ol g oup
di e signi ican ly (column (1) s. column (2)). Fo indi-
iduals ansi ioning om employmen o unemploymen
be ween
=0
and
=1
, he ou come le els in
=0
a e
consis en ly lowe han hose o con inuously employed
indi iduals be o e applying any weigh ing. Acco dingly,
he dep i a ion indexes o basic goods and ac i i ies indi-
ca e a signi ican ly highe le el in he ea men g oup,
indica ing a lowe s anda d o li ing. When examin-
ing sociodemog aphic cha ac e is ics, he able e eals
ha men, young employees, employees wi h a mig a-
ion backg ound and he low-skilled a e mo e p one o
expe iencing unemploymen . Addi ionally, he ea men
g oup, on a e age, aces mo e se e e heal h limi a ions.
The e a e also signi ican di e ences ega ding household
cha ac e is ics, as hose who become unemployed a e
less likely o be ma ied and less likely o ha e child en.
Conside ing he cha ac e is ics o hei p e ious jobs
and employmen his o y, indi iduals who become unem-
ployed ha e, o ins ance, sho e job enu e, ea n lowe
wages, and a e mo e equen ly a ec ed by in e up ions
due o pe iods o unemploymen o nonemploymen
compa ed o hose who emain employed.
The empi ical app oach e ec i ely balances g oup di -
e ences in obse ed cha ac e is ics. A e weigh ing,
7 Fo a de ailed desc ip ion o he co a ia es, see Pohlan(2019).
8 The selec ion o hese co a ia es aligns wi h he con ol a iables used in
o he empi ical s udies on he non-pecunia y e ec s o job loss (see, e.g.,
Kassenboehme and Haisken-DeNew 2009 and Ma cus 2013).
Page 7 o 16 12 Unemploymen ’s long shadow: hepe sis en impac onsocial exclusion
he e a e no longe s a is ically signi ican di e ences
be ween he ea men and con ol g oup (column (1) s.
column (3) o Table1). The las column epo s s and-
a dized di e ences, deno ed as
X
, be ween ea ed and
e-weigh ed con ol indi iduals, se ing as a scale- ee
measu e o balancing.9 Gi en he absence o a uni e sally
ag eed-upon c i e ion o de e mining wha cons i u es
a su icien ly small s anda dized di e ence o achie e
balance, I adop he ule o humb sugges ed by Aus in
(2011):
�X<|0.1|
. The s anda dized di e ences epo ed
in Table1 poin o no subs an ial di e ences be ween
ea men and con ol g oup a e applying IPW.
The la ge numbe o non- ea ed in compa ison o
ea ed indi iduals (a a io o 1:28) inc eases he likeli-
hood o inding a sui able con ol g oup. This is a i med
by he balancing es , which demons a es he compa-
abili y o he ea ed and he weigh ed con ol g oup
ac oss a wide ange o co a ia es. To assess he alidi y o
he o e lap assump ion, I compa e he dis ibu ion o he
es ima ed p opensi y sco es in he ea men and con ol
g oup, espec i ely. As shown in Figu e B.3 in he Appen-
dix, he e is subs an ial o e lap in he sample. Addi-
ionally, I examine whe he he e a e ea ed cases wi h
Table 1 Selec ed desc ip i e s a is ics
No es:S anda d. Di .: S anda dized Di e ence. PQ: P o essional quali ica ion. ssc: social secu i y con ibu ions. Scales o he a iables a e shown in squa ed b acke s.
Sou ce: PASS-ADIAB 7520, own compu a ions
T ea ed Con ol Con ol P- alue S anda d.
Unweigh ed Weigh ed Di .
(1) (2) (3) (1) − (3) (1) − (3)
Ini ial ou come le els
Household income [in €] 1383.157 1751.613 1375.832 0.757 0.009
Dep i a ion o basic goods [0-4.7] 0.183 0.076 0.181 0.886 0.005
Dep i a ion o ac i i ies [0-5.3] 0.522 0.282 0.536 0.612 − 0.019
Social engagemen [0-5] 0.506 0.753 0.503 0.927 0.003
Social s a us [1-10] 5.770 6.264 5.772 0.974 − 0.001
Social in eg a ion [1-10] 7.337 7.891 7.304 0.684 0.016
Sociodemog aphics & household cha ac e is ics
Female 0.436 0.528 0.432 0.846 0.008
Age [in yea s] 41.052 44.461 40.968 0.850 0.007
Mig an 0.088 0.044 0.095 0.559 − 0.025
Ma ied 0.383 0.548 0.377 0.755 0.012
Numbe o own child en 1.179 1.426 1.204 0.632 − 0.020
Se ious heal h es ic ions 0.254 0.198 0.256 0.909 − 0.004
PQ: no oca ional aining 0.175 0.096 0.179 0.838 − 0.008
PQ: oca ional aining 0.615 0.621 0.612 0.872 0.006
PQ: ad anced oca ional aining 0.059 0.095 0.059 0.954 0.002
PQ: academic deg ee 0.150 0.188 0.150 0.974 − 0.001
Eas Ge many 0.313 0.278 0.312 0.930 0.003
P e ious job cha ac e is ics & employmen his o y
Pe manen con ac 0.655 0.895 0.647 0.646 0.017
Tenu e [in mon hs] 20.707 70.351 21.432 0.537 − 0.020
Daily wage [in €] 59.696 83.726 61.080 0.257 − 0.040
Numbe o employmen pe iods wi h ssc 7.548 5.729 7.536 0.964 0.002
Employmen du a ion wi h ssc [in mon hs] 117.116 184.471 119.188 0.589 − 0.020
Numbe o unemploymen pe iods 4.501 2.608 4.540 0.826 − 0.010
Unemploymen du a ion [in mon hs] 67.792 36.542 67.342 0.842 0.008
Numbe o obse a ions 1060 29,375 29,375
9 The s anda dized di e ence is compu ed as
�
X=
¯
X1−
¯
X0

/

(S
2
1
+
S2
0)/2
0.5
, whe e
¯
Xw
ep esen s he sample mean o ea ed (
w=1
) o con-
ol (
w=0
) indi iduals, and
S2
w
ep esen s he espec i e sample a iances
(Aus in 2011; Guo and Ma k 2015).
X
o e s an ad an age o e he con-
en ional -s a is ic in ha i does no mechanically in la e wi h sample size,
hus a oiding he exagge a ion o mino imbalances ha migh s ill appea
signi ican in a - es .
12 Page 8 o 16
L.Pohlan
p opensi y sco e alues exceeding he maximum alue
among he non- ea ed indi iduals (Lechne and S i -
ma e 2019). In his applica ion, howe e , such cases do
no exis .
The model diagnos ics indica e ha , gi en he a ailable
da a, i is easible o iden i y an app op ia e con ol g oup
o my empi ical analysis. Appendix Figu es B.1 and B.2
p esen he mean alues o he ou come a iables in le -
els h ee yea s be o e and ou yea s a e ea men s a ,
sepa a ely o ea ed and con ol indi iduals be o e and
a e applying IPW. The plo s al eady show ha indi idu-
als who become unemployed expe ience a subs an ial
and las ing de e io a ion in bo h he ma e ial and social
dimensions o social exclusion. While he ajec o ies o
some ou come a iables a e qui e di e en be ween ea -
men and con ol g oup be o e weigh ing in he pe iod
be o e job loss, hese di e ences disappea a e weigh -
ing. This al eady hin s a simila ends in ou comes p io
o he onse o ea men , which is equi ed by he e en
s udy app oach. Howe e , he e en s udy plo s p esen ed
in he esul s sec ion below allow o a mo e sys ema ic
assessmen o pa allel ends in bo h g oups.
In addi ion o he pa allel end assump ion, he iden-
i ica ion s a egy equi es ha u u e job loss does no
in luence he ou come a iables be o e he ac ual an-
si ion in unemploymen . Fo ins ance, Wunde and
Zeydanli (2021) documen signi ican lead e ec s ega d-
ing pe cei ed job insecu i y and job sa is ac ion one
yea p io o a plan closu e. Appendix Figu es B.1 and
B.2 indica e ha he ou come le els in he ea men
g oup a e gene ally on an inc easing ajec o y, which is
e e sed by he e en o job loss. Thus, he e is no clea
indica ion o an icipa ion. Howe e , i he ou come le -
els one yea p io o job loss a e ne e heless nega i ely
in luenced by u u e unemploymen , he eal cos s o
unemploymen would e en be highe .
6 Empi ical indings
6.1 Baseline esul s
This sec ion p esen s he baseline IPW-e en s udy anal-
yses o he e ec o unemploymen on he ma e ial and
social dimensions o social exclusion, as de ined in Sec .3.
Ma e ial dimension. Figu e 1 shows he es ima ed
e ec s o unemploymen on household income (panel A),
dep i a ion o basic goods (panel B) and dep i a ion o
ac i i ies (panel C). Panel A illus a es ha expe iencing
unemploymen esul s in a decline in disposable income
and a de e io a ion in li ing s anda ds. Fo indi iduals
who ha e become unemployed, he a e age equi alen
mon hly household income dec eases by app oxima ely
270 eu os one yea a e job e mina ion compa ed o he
con ol g oup, ep esen ing a educ ion o 20 pe cen .
The e ec diminishes o e ime bu amoun s s ill o 174
eu os a e ou yea s.
Job loss also leads o a signi ican inc ease in dep i a-
ion o basic goods (by 0.052 scale poin s) and ac i i-
ies (by 0.200 scale poin s), e lec ing cons ain s on he
s anda d o li ing indi iduals we e accus omed o. These
indings indica e ha indi iduals a e mo e likely o limi
hei ac i i ies ollowing unemploymen a he han cu -
ing back on basic goods. No ably, he e ec sizes a e
subs an ial. The weigh ed dep i a ion index o basic
goods and ac i i ies is a ound 0.18 and 0.53, espec i ely,
a ime
=0
in bo h he ea men and he weigh ed con-
ol g oup. These alues co espond o abou hal he size
obse ed in he unweigh ed con ol g oup (see Table1).
In e es ingly, hese e ec s a e al eady no iceable one
yea a e becoming unemployed and emain ela i ely
s able o e ime. This inding speaks agains a delayed
impac o unemploymen , which one would expec
ega ding du able consume goods. A mo e de ailed
analysis o he indi idual componen s o he dep i a ion
index, no p esen ed he e, suppo s his assump ion.10 In
he case o job loss, a ec ed indi iduals p edominan ly
cu back on ac i i ies like aca ion ips, dining ou ,
a ending cinema, hea e , o conce s. Mo eo e , hey
a e less inclined o pu chase new clo hes o u ni u e,
and sa ing becomes mo e challenging. They also ace
inc easing di icul ies in handling unexpec ed expenses.
In con as , unemploymen does no di ec ly a ec he
possession o i ems like a washing machine o a ele ision
se in he home. Financial es ic ions conce ning basic
goods a e mos commonly obse ed in ela ion o own-
ing a ca o he size o he apa men .
Social dimension. Figu e2 shows he e ec s o unem-
ploymen on social engagemen (panel A), social s a us
(panel B) and social in eg a ion (panel C). Wi h ega d
o social pa icipa ion, he esul s a e inconclusi e. I ind
ha indi iduals who ha e los hei jobs do no signi i-
can ly educe hei social engagemen including in ol e-
men in clubs, ade unions, poli ical pa ies, chu ch
cong ega ions o o he o ganiza ions (see panel A o
Fig.2). Addi ionally, he e is no no iceable e ec on he
numbe o close iends (see Figu e B.4 in he Appendix).
Se e al explana ions can be conside ed o his. Fi s ly,
as desc ibed ea lie , unemploymen can make i mo e
challenging o main ain social con ac s, bu his aspec
may no be adequa ely cap u ed by he measu es con-
side ed. Fu he mo e, exis ing social ne wo ks can o e
emo ional suppo du ing c isis si ua ions, which would
a gue agains a decline in iendship ela ionships. Mo e-
o e , los con ac s migh be eplaced by new acquain -
ances and iendships. Finally, al hough he indings do
10 The esul s a e a ailable on eques .
Page 15 o 16 12 Unemploymen ’s long shadow: hepe sis en impac onsocial exclusion
quali y o li e o indi iduals acing signi ican labo ma -
ke de achmen (Acha z e al. 2024).
O e all, unemploymen -p e en ing and pa icipa-
ion-p omo ing policy measu es can po en ially coun-
e ac he exclusion expe ienced by hose in p eca ious
ci cums ances and he eby con ibu e o s eng hening
social cohesion. These non-mone a y bene i s should
also be conside ed when designing such measu es.
Supplemen a y In o ma ion
The online e sion con ains supplemen a y ma e ial a ailable a h ps:// doi.
o g/ 10. 1186/ s12651- 024- 00369-8.
Supplemen a y Ma e ial 1.
Acknowledgemen s
The au ho would like o hank Ma hias Collischon, Nicole Gü zgen and
S e anie Gunde o help ul commen s and discussions.
Au ho con ibu ions
The au ho is solely esponsible o his a icle. The au ho ead and app o ed
he inal manusc ip .
Funding
No applicable.
A ailabili y o da a and ma e ials
This pape uses su ey and adminis a i e da a om he Resea ch Da a Cen e
(FDZ) a he Ins i u e o Employmen Resea ch (IAB). Since da a access is
es ic ed by he laws o he Ge man Social Code, he da a is no eely a ail-
able o he esea ch communi y. Membe s o he esea ch communi y can
apply o and access da a p oduc s a he FDZ. Access can ake place, e.g.,
ia on-si e use o ia emo e da a access. Mo e de ailed in o ma ion can be
ound he e: h ps:// dz.iab.de/en/da a-access/. The ep oduc ion codes o he
analysis a e a ailable om he au ho upon eques .
Decla a ions
E hics app o al and consen o pa icipa e
No applicable.
Consen o publica ion
No applicable.
Compe ing in e es s
The au ho decla es ha she has no compe ing in e es s.
Recei ed: 28 No embe 2023 Accep ed: 6 June 2024
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