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Labour market status and well-being during the great recession: a changing relationship?

Bayliss, David

[Thesis]. Manchester, UK: The University of Manchester; 2016.

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Abstract

The University of Manchester. David Bayliss. For the degree of Doctor of Philosophy. Labour Market Status and Well-Being During the Great Recession: a Changing Relationship? July 2016. This thesis investigates the relationship between labour market statuses and well-being in the UK working age population, and the moderating role of the Great Recession. Research on the relationship between labour market statuses and well-being outcomes identifies negative associations with unemployment and economic inactivity. These findings are typically presented as independent of macroeconomic conditions, but to what extent does this assumption hold? The central proposition of this thesis, is that economic crises moderate the way in which labour market statuses affect well-being, thereby changing the value of statuses, not just their prevalence. The main research question addressed is ‘for the UK working age population, to what extent did labour market and employment statuses contribute to the greater or lesser effects of the economic crisis (2007/8–2011) on well-being, compared to the pre-recession ‘boom’ period (2003/4–2006/7)?’I make use of a national panel data series from the British Household Panel Survey and Understanding Society. Firstly, after critiquing the reliance on subjective well-being (SWB) measures, confirmatory factor analysis is used to develop a measure of positive psychological health, representing a single dimension of well-being. This is then compared to a measure of SWB in a series of latent growth models to investigate individual trajectories over the study period. Secondly, multilevel models are used to estimate the relationship between five labour market and employment statuses and positive psychological health, comparing the pre-recession and recession periods. Finally, a dynamic structural equation modelling approach is used to investigate selection and causation in the relationship between labour market status and positive psychological health. Aggregate positive psychological health was associated with a recession period decline, in contrast to SWB which remained stable. Labour market statuses were found to moderate the impact of recession. People who were economically inactive were associated with the largest declines in positive psychological health during the recession period, compared to the pre-recession period, followed by those in standard employment. In contrast, the relationship between non-standard employment and unemployment and positive psychological health remained constant over time. Finally, despite evidence of selection into labour market statuses, the findings show a strong causal impact of statuses on positive psychological health.The findings provide a different take on those hardest hit by recession, showing that some of the most vulnerable to low psychological health were most exposed to the impact of recession by virtue of their labour market status. The protective value of standard employment was also diminished relatively. Evidence in favour of a causal interpretation suggests policy makers should use employment and welfare policy to prevent an accumulation of welfare issues.