Unemployment as a Social Norm Revisited – Novel Evidence from German Counties

Abstract

Unemployed individuals may regain identity utility through coping strategies, which however vary with age and gender. Using highly detailed German county level data, we test whether the social norm effect of unemployment is age-dependent. The wellbeing differential between the unemployed and the employed is found to increase with the local unemployment rate at the beginning of the working life but to remain steady or even to decrease in older age. Individual unemployment, however, remains an extremely uncomfortable experience even if local unemployment is high.