Staying Down with the Joneses : Neighbourhood Differences in the Well-being Effects of Unemployment

Previous research has demonstrated that unemployment has an adverse effect on mental well-being but that peer effects as captured by the unemployment of neighbours can moderate these negative impacts. The idea being that contact with others who are also unemployed can help the unemployed feel relatively better off. The question as to whether certain unemployed individuals are more likely than others to be affected by comparison effects in the labour market has, however, received little empirical or theoretical attention. In this study we identify substantive gender, age and personality differences in the extent to which the unemployment of neighbours alleviates the psychological distress associated with unemployment. We suggest that these observed differences in the well-being effects of unemployment across neighbourhoods may have significant labour market implications. This is because the well-being ‘cost’ of unemployment may be less than anticipated in high-unemployment neighbourhoods and particularly those with relatively higher concentrations of older and unemployed males