Well-being costs of perceived job insecurity: Mediating role of financial satisfaction, subjective healthiness and institutional trust

Abstract

The fear of losing the current job or not finding a new job significantly affects an individual’s well-being. However, perceived job insecurity also affects an individual’s financial satisfaction, subjective healthiness, and trust in institutions - determinants of subjective well-being. This research explores the direct and indirect effects of perceived job insecurity on the life satisfaction of the full-time employed and unemployed people within a serial mediation analysis framework. Using the World Values Survey (6th wave) dataset, we estimated the effects in aggregate and disaggregated (by the income level of countries) samples. Regarding unemployed people, results display the almost equal contribution of direct and indirect channels. In contrast, the dominance of indirect impact channels is more considerable in the case of individuals employed full-time. In disaggregated samples, no significant impact is detected in low-income and upper-middle-income class members, while the effects are significant and economically meaningful for lower-middle-income and high-income countries. Non-pecuniary costs exceed pecuniary costs. The primary mediating factor is satisfaction with a household’s financial situation, especially in high-income countries. The availability of unemployment insurance benefits can partially compensate well-being costs of perceived job insecurity. Nevertheless, governments need to enhance labour market efficiency to diminish both unemployed and full-time employed individuals’ perceived job insecurity, which would improve societal welfare in the end.