Unemployment’s Life-Satisfaction Cost and Loneliness

• Published in: Journal of happiness studies Vol. 26; no. 6; p. 102
• Main Authors: Friehe, Tim, Pfeifer, Christian
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.08.2025; Springer Nature B.V
• Subjects: By products; College graduates; Economics; Employment; Identity; Life satisfaction; Loneliness; Personality and Social Psychology; Philosophy; Positive Psychology; Public health; Quality of Life Research; Research Paper; Social capital; Social integration; Social isolation; Social networks; Social norms; Social Sciences; Social support; Time use; Unemployment; Variables; Well being; Loneliness; SOEP; Mediation; Unemployment; I31, D91, J68; Life satisfaction
• ISSN: 1389-4978; 1573-7780
• DOI: 10.1007/s10902-025-00941-0

Unemployment consistently lowers life satisfaction on average, yet the individual impact of job loss varies significantly. The underlying factors driving this heterogeneity remain a subject of ongoing research. Using data from the German Socio-Economic Panel, we demonstrate a compelling link between unemployment and loneliness, suggesting that a substantial portion of unemployment’s detrimental impact on life satisfaction can be attributed to the social isolation it induces. This finding is robust across various estimation methods and subsamples. Notably, the indirect effect of unemployment on life satisfaction through loneliness is particularly pronounced among college graduates, while it is less sizable for East Germans. Our results underscore the potential effectiveness of policies aimed at combating loneliness in mitigating the psychological well-being of the unemployed.