Unemployment and Social Integration: Analysing the Impact of Financial Strain, Social Roles, and Identity

Abstract

Relations to family and friends are a key dimension of an individual’s social integration and, by extension, are crucial for the social cohesion of societies. Based on that principle, this study explores the effects of unemployment on close personal relations and asks whether negative effects of unemployment are primarily explicable as financial losses or social aspects of identity. This analytical approach goes beyond analysing the direct effects of unemployment through differentiating effects by gender, household composition, and individual work and family values. In doing so, it examines the channels through which unemployment has the potential to erode social relations.Individual fixed effects models based on German Socio-Economic Panel (SOEP) data from 1990 to 2017 reveal that financial strain fails to explain the effects of unemployment on social relations. However, the results suggest that social identity is influential in shaping unemployment effects. Although men see a reduction in their personal relations when experiencing unemployment, women’s unemployment experiences do not affect the frequency of their social interactions. Moreover, the fact that unemployment leads to a reduction of men’s social contacts, particularly among those living with children, points to potential difficulties in performing the social role of the family provider. Finally, placing high importance on having children, partnership and caring for others mitigates negative unemployment effects for men.