Unemployment’s long shadow: the persistent impact on social exclusion

Abstract

This paper studies the long-term consequences of unemployment on different dimensions of social exclusion. Based on longitudinal linked survey and administrative data from Germany and an event study analysis combined with inverse propensity score weighting, I document that becoming unemployed has lasting adverse effects on both individuals’ material well-being and their subjective perception of social status and integration, persisting even after four years. An examination of effect heterogeneity underscores that the enduring effects of job loss are more pronounced for individuals confronted with challenging labor market conditions, those with a history of repeated unemployment, and individuals with lower levels of educational attainment.