Both economic and psychological research provides strong evidence that unemployment
adversely affects a person's mental, emotional, and physical wellbeing, which in turn may
impair his/her ability to regain employment. Studies also suggest a person's "psychological
capital" (personality traits that influence the productivity of labour) may mediate (1) the impact
of unemployment on wellbeing and facilitate re-employment. While the effects of
unemployment have been well documented, the simultaneous relationship between wellbeing
and labour market status and the influencing role of psychological capital have received much
less attention, requiring further investigation. There is still concern in the literature that "the
exact nature of the interrelationships between labour market experience and mental health
remains unclear and complicated by questions over the direction of causality and
heterogeneous impacts across individuals." (Dockery, 2006, p. 2)
The purpose of this research is to explore the interrelationship between labour market status,
wellbeing, and psychological capital in more detail. The thesis combines key concepts from
various economic and psychological theories, each partially describing how labour market
status, wellbeing, and psychological capital interact with each other. The validity of the
integrated model is then tested by estimating structural equations for labour market status and
wellbeing using cross-sectional and longitudinal data from the Household, Income and
Labour Dynamics in Australia (HILDA) Survey. The HILDA Survey is a broad social and
economic survey that focuses on family and household formation, income and work. The
survey contains economic, psychological, and demographic data with sound psychometric
qualities for a large sample of working aged Australians that makes it well suited to this type of analysis.
As well as the regression analyses, the results of a case study conducted with a group of jobseekers
at an employment agency are also reported. The study sought to evaluate the
effectiveness of personal development training for the unemployed (designed to improve
psychological capital), and its subsequent influence on their ability to regain employment.
While the research was halted before completion, some valuable insights were gleamed from
the study, and these warrant discussion.
Findings of the research indicate a simultaneous relationship exists between labour market
status and wellbeing. Individuals with healthier wellbeing are more likely to be employed,
and employment contributes to healthier wellbeing. The results also indicate psychological
capital is an important variable influencing wellbeing, partially mediating the impact of
unemployment on wellbeing. Employed individuals have significantly higher psychological
capital than those who are unemployed or not in the labour force, or those who transition in
and out of employment. Psychological capital appears to be a relatively stable, but somewhat
malleable, personality construct that does not vary greatly for individuals experiencing
changes in labour market status (LMS). People who develop poor psychological capital
during youth may therefore be predisposed to a higher risk of being unemployed when they
enter the labour market.
The results suggest programs/policies that foster healthier wellbeing and psychological capital
during youth, or repair damaged psychological capital once in the labour market, could help
lower unemployment or the duration of unemployment. Recent Australian government policy
initiatives designed to improve labour force participation and productivity by enhancing
human capital are likely to be more effective if they also target psychological capital. The
research also highlights shortcomings in mainstream economic theory, which are discussed
along with the weaknesses of the study, and opportunities for further research.
(1) A mediator effect (or indirect effect) involves one or more "intervening variables" transmitting some or all of the causal effects of prior variables (e.g. unemployment) onto subsequent variables (e.g. wellbeing). See: Byrne, 2001).
| Identifer | oai:union.ndltd.org:ADTP/202604 |
| Date | January 2007 |
| Creators | Cole, Kenneth, n/a |
| Publisher | University of Canberra. Business and Government |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | ), Copyright Kenneth Cole |
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