Your Friends Are Keeping You Unemployed

More

OK, the headline overstates the case a bit. But the same way that having heavy friends makes you more likely to put on weight, having unemployed friends makes you more content to remain unemployed, according to a new World Bank study (via Economix):

The lesson to be drawn by these findings is that one's employment decisions have a strong externality on other's labor supply and job search effort, through comparison effects. Upon losing a job, if a relevant other is also jobless then both individuals search with less intensity. In the opposite scenario, if all relevant others are employed, search intensity increases for the unemployed...

If others are unemployed, I will search less and extend my unemployment duration, in turn affecting others' return to work.

This makes sense, and it's both comforting and unnerving. It's comforting to know that having company in the struggle against unemployment can ease the psychological trauma, which can be very real indeed. But it's unnerving to think that communities of underemployed people can marinate in a kind of dreary stasis.

Chronic under- and unemployment has long-term implications. Skills atrophy. Workplace savvy dulls. Medium-term wages deflate. Today, the economy isn't producing enough open positions for the 16 percent of the economy that either has no jobs or has been pushed to work part-time -- no matter how they feel about being unemployed. But when the job market starts to recover, pockets of blithely underemployed folks represent wasted potential to work and capacity to consume products with the money they earn.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In