by H Keenoo, MA candidate, School of Economics, University of Kent
One of the after-effects of the 2007/2008 Global Financial Crisis was the rising unemployment rates. Youth unemployment was on the rise due to a number of factors such as lack of experience, firm closures, lack of appropriate qualifications, lack of skills and so on. The purpose of this paper is to analyse the effect of unemployment on health of those people who are aged between 16 and 29. Given lack of information on physical health, the focus of this paper is to examine the effect of unemployment on mental health of young people with an emphasis on gender differences. The data used in this paper are micro data from the European Social Survey Round 6 2012/2013 dataset. Several dummy variables were created from the questions asked in the survey and the four measures of mental well-being are depressed, failure, unhappy and not hopeful about the future. The methods used in this study are linear regressions as well as probit regressions given that the dependent variables are binary. There are two models which are used to look at the effect of unemployment on mental health. The first model which is the main model, looks at the impact of both past unemployment and current unemployment on mental health and it includes an interaction term between past unemployment and young people. The interaction term looks at the differential impact of past unemployment on mental health between young people and old people. The second model includes the gender variable in the interaction terms, that is, there is a three-way interactions between past unemployment, young people and male and the pairwise interactions between past unemployment and young people, past unemployment and male and lastly, young people and males are also included in the second model. The results from this study indicate that past unemployment increases the likelihood of mental health problems, after controlling for current unemployment. Moreover, the interactions between past unemployment and young people showed that young people were less likely to feel like a failure and not to be hopeful about the future compared to older people, given that they have ever been unemployed for a period of more than three months. The interactions between past unemployment and male did not appear to statistically significant and the three way interactions were significant only in the case of failure.
