Decomposing the Saddening Effect of Unemployment

This project investigates why unemployed individuals report lower emotional well-being than employed individuals—even during leisure time. Previous research (e.g., Knabe, Schöb, Rätzel, and Weimann, Economic Journal, 2010) showed that unemployment reduces life satisfaction not only through income loss or lack of work-related purpose, but also because leisure itself becomes less enjoyable—a phenomenon known as the “saddening effect” of unemployment.
The project aims to unpack and quantify the channels through which this saddening effect arises. Using time-use and well-being diary data from the UK Time Use Survey (UKTUS 2014–2015), American Time Use Survey (ATUS 2010–2013, 2021), and German Socio-Economic Panel (SOEP 2012–2015), we analyze how unemployed and employed individuals experience emotional well-being across different daily activities.
The empirical strategy combines mediation analysis and Oaxaca–Blinder decompositions.
Preliminary results from the UKTUS data confirm a significant saddening effect of unemployment, particularly for men and during core leisure activities. However, differences in income, activity duration, or education explain little of this gap. The most consistent factor is that unemployed individuals spend more of their leisure time alone, which strongly reduces the emotional payoff from non-work activities.
By integrating evidence from multiple countries and datasets, the project seeks to clarify the mechanisms behind the emotional costs of unemployment and to identify potential policy levers for mitigating its psychological burden.