What Benefits Does Employment Provide that Unemployment Deprives?

Using the research in unemployment and well-being to inform our understanding of the
relationship between employment and well-being

A theoretical paper by:

Budoor Y. Almarzooqi 1

6th of May 2012

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Budoor Y. Almarzooqi PGD in Organizational Psychology by Birkbeck – University of London.
ORCID publisher ID https://orcid.org/0000-0002-2905-2547

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Introduction:

The effects of unemployment on the psychological well-being of the unemployed people

grabbed the attention of researchers more than 25 years ago (Vansteenkiste et al 2005).
During that period, many studies were conducted to research the effects of unemployment
on a number of aspects, or dimensions of well-being. Symptoms of anxiety, somatic
symptoms, and poorer well-being (Vansteenkiste et al 2004) decreased self-esteem, and even
increased rates of child abuse and suicide (Vansteenkiste et al 2005) were correlated to the
experience of unemployment.

Many studies attempted to explore the effects of unemployment on well-being of the

unemployed. The underlying assumption of most research in this field is that employment
provides benefits that meet well-being related needs of an individual. The deprivation of these
benefits by unemployment results in a decrease in well-being levels. The available research
provides a useful specification, categorization, and prioritization of these benefits.

The objective of this paper is to use some research findings in unemployment and well-being
to increase our understanding of the relationship between employment and well-being. The
paper is divided into 3 sections: the first section will define the key terms discussed in this
paper. The second section briefly introduces previous research in unemployment and well-
being. The third section specifies the additions that this research can make to our
understanding of employment and well-being. This will be followed by a quick display of the
methodological issues, the limitations of this paper, and concluding remarks.

Section One- Key Terms:

The term unemployment can be defined using the International Labour Organization's
resolution concerning statistics that was adopted by the Thirteenth International Conference
of Labour Statisticians (October 1982)- paragraph 10 “The unemployed comprises all persons
above a specified age who during the reference period were without work, currently available
for work, and seeking work.” 2 Hence, for an individual to be considered unemployed, he/she
must be able to work, available for work, and is actively seeking work.

The term Employment can also be defined using the resolution mentioned above; “The
employed comprises all persons above a specified age who during a specified brief period
either one week or one day, were in paid employment (performed some work for wage or
salary in cash or in-kind) or self-employed.” Hence, an employed person is an individual who
during a specified period of time performed work for payment or was self-employed.

The term Well-being is a general concept of how someone feels. Well-being is a multifaceted
concept that cannot be measured by a single variable. Most research in unemployment and
well-being used the components of subjective wellbeing that were introduced by Diener 1984.
Subjective well-being is made of 3 core components; negative affect, positive affect, general
life satisfaction (Winkelmann, 2008).

2 The resolution concerning statistics of the economically active population, employment, unemployment, and
underemployment, adopted by the Thirteenth international Conference of Labour Statisticians (October 1982)-
paragraph 10; http://www.ilo.org/public/english/bureau/stat/res/index.htm

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The term Benefits was made integral in the research on unemployment and well-being by the
Latent Deprivation Model. This term will be discussed profusely in this paper. It refers to the
advantages that the employment provides to employees. These advantages satisfy some
needs that individuals have. If met, these needs are argued to improve well-being. Hence, the
terms benefits and needs will be used interchangeably in this paper.

Section Two- Introduction to Previous Research in Unemployment and Well-being:

The research on the relationship between unemployment and well-being developed in 3

threads; the correlation thread, the modeling thread and the borrowing thread. The first
thread of research attempts to correlate unemployment as an independent variable to some
aspects of well-being as the dependent variables. In that sense, aspects of well-being can be
cognitive, affective, or behavioral. This research aims at bringing policy makers' attention to
the negative effects of unemployment on individuals' well-being, while making a good
contribution to the literature. However, it does not aim at modeling these variables or
explaining how they work together.

McKee-Ryan et al. 2005's Meta-Analysis of unemployment research provides a useful

categorization of these variables using Diener et al. 1984's distinct components of subjective
well-being; unemployment was correlated to (a) pleasant affect or positive well-being (e.g.,
joy, elation, happiness, mental health), (b) unpleasant affect or psychological distress (e.g.,
guilt, shame, sadness, anxiety, worry, anger, stress, depression), (c) life satisfaction (a global
evaluation of one’s life).

The current literature lacks a theory that explains how or why unemployment affects well-
being (Vansteenkiste et al 2005). Nonetheless, the second thread of research in this field
provides useful modeling of well-being variables affected by unemployment. There were
some popular models that gained attention by subsequent research; the Latent Deprivation
Model by Jahoda 1981, the Vitamin model by Warr 1987 and the Agency Restriction Model
by Fryer and Payne 1986 (Ervasti et al., 2006). These theories provide useful categorization
and prioritization of well-being needs affected by unemployment that are discussed in the
next section.

The third thread of research borrowed propositions of theories that were composed for other
psychological topics and applied them to explore the effects of unemployment on well-being.
To understand the unemployed people's behavior in job search, the propositions of some
motivation theories like the expectancy value theory, self-efficacy theory, the learned
helplessness theory, and the attribution theory (Vansteenkiste et al 2005). Also, to
understand the effects of unemployment on self-esteem, propositions of self-esteem
theories were used, mainly the life stage conflict theory by Erickson 1959.

Section Three- Unique Research in Unemployment and Well-being to Increase Our

Understanding of the Relationship between Employment and Well-being:

There are unique additions that the research in unemployment and well-being can make to
our understanding of employment and well-being. More specifically, the Latent Deprivation

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Model and the Agency Restriction Model made unique contributions to our understanding of
the relationship between employment and well-being. These contributions are discussed in
the next section.

The Specification and Categorization of Employment Benefits:

The Latent Deprivation Model was introduced by Jahoda 1981. The model became very
popular and profoundly contributed to the movement of the literature in this area afterwards.
The model posits that the employment status provides two sets of benefits; manifest benefits
and latent benefits. The manifest benefits meet individuals' financial needs that can be
satisfied by wages. The latent benefits, on the other hand, are linked to psychological needs;
having a time structure, enlarging social contacts, having common goals, having an
acceptable status, and having a collective purpose.

According to Jahoda, employers unintentionally provide these basic benefits (Creed et al

2005). In other words, being in employment status per se provides those benefits regardless
of the job conditions or the employment relationship. By being employed in any job, an
individual can get some level of manifest and latent benefits that meet certain well-being
needs.

The importance of having time structure and being part of a social network gained
considerable attention by subsequent research. The "social capital" construct being defined
as the participation of social activities (Winkelmann 2008) is argued to shield an individual
from the effects of unemployment. However, just like other arguments of the model, this
argument yielded mixed evidence. Winkelmann 2008 compared the general life satisfaction
of a group of individuals while being employed, and roughly one year later while being
unemployed. The study found that social capital could not save the sampled individuals from
the harmful impact of unemployment.

The Vitamin Model by Warr 1987 provides a similar set of benefits that employment provides
to an individual. Warr proposed that the resulting negative psychological and physical
outcomes of unemployment are due to deprivation from 9 psychological needs; opportunity
for control, opportunity for skills use, externally generated goals, variety, environmental
clarity, availability of money, physical security, opportunity for interpersonal contact, and
valued position (McKee-Eyan et al., 2005).

Both models made important contributions to our understanding of the benefits that
employment provides (Vansteenkiste et al, 2005). Since the deprivation of these benefits by
unemployment results in decreased well-being, we can take that these benefits are in essence
well-being needs of any individual. Certainly, the Latent Deprivation Model makes an advance
by providing a categorization of these needs into, financial and non-financial benefits-
manifest and latent.

Both employers and researchers can use this categorization to explore ways for providing
them. These lists of benefits can work as checklists for employers. We obviously can't take it
for granted that every job provides the full set of benefits. For example, reporter and
journalistic jobs lack time structure. Work-from-home jobs do not provide opportunities to

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enlarge social contacts that are equivalent to those provided by office or customer service
jobs.

Evidence is not yet available on the right mixture and level of these benefits. We still do not
know the breakeven point of each benefit. In other words, at what point can a job dissatisfy
any of those well-being needs that work becomes as harmful as unemployment. The answer
for this question is left open for future research.

The Prioritization of Benefits:

A central question that research in unemployment and well-being raised is: What is more
important, money or social needs? Which one to address first by interventions to improve
employees' well-being?

The Latent Deprivation Model was the first to posit a prioritization of well-being benefits
provided by employment; latent being more central to well-being that manifest. This
proposition is perceived in the literature as the most important by Jahoda 1981. It was
challenged by a number of studies. For example, Creed et al. 2005 found that latent benefits
are linked to well-being, yet when financial strain is considered, these links are reduced and
superseded by financial benefits.

The Agency Restriction Model by Fryer and Payne 1986 is taken as the boldest challenge to
the Latent Depravation prioritization of benefits. It is also credited by a number of researchers
as the second most influential in this area of research (Ervasti et al., 2006).

The Agency Restriction model views an individual as a more proactive agent who undertakes
tasks of organizing information, searching for meaning, and making decisions about the future
(Ervasti et al 2006). Although it acknowledges the importance of the latent needs, the model
posits that the financial hardship imposes coercive poverty on an unemployed individual. This
poverty takes away a person's access to basic needs like decent housing, food and leisure.
This poverty also deprives a person from the information needed to make crucial plans and
decision about the future. And in that sense, being unemployed renders an individual
deprived from one's personal agency (Creed et al., 2005).

The debate of which ones are more important, the financial or non-financial needs remains
ongoing by researchers of the field. Nonetheless, the proposition of prioritizing financial and
non-financial benefits/needs can indeed be helpful in designing interventions. "Which one
should we address first?" is a question of great importance when an employer wishes to
intervene to improve employees' well-being, especially if limited resources were available for
this intervention.

Intentionality of Benefit Provision:

The Latent Deprivation Model posits that the latent benefits are unintended by-product
benefits (Paul et al, 2007) of employment. In this sense, the Latent Deprivation Model
introduces to us the concept on intentionality of provision of benefits. Employers, whether
they intended to or not, provide a set of benefits that do meet well-being needs of their

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employees. This raises a number of questions. Do all employers know the importance of the
unintended benefits that they provide? Are there other unintended benefits that
employment provides?

The most important concern of the intentionality concept is that employers might remove or
change their levels without knowing. How does this unintentional manipulation of levels
impact employees' well-being? More research is necessary to answer this question.

Methodological Concerns:

It is hardly possible to discuss research in well-being without scrutinizing methodological

issues. Similar to most of the research in the field of work and well-being, most of the research
in this area is cross sectional and relies on self-report. McKee-Ryan et al. 2005 argue that this
hindered the development of theories that explain how and why variables interact with each
other.

Parallel to the movement of research in employment and well-being, there is a movement to

longitudinal studies in unemployment and well-being. However, even longitudinal studies can
suffer selection biases (McKee-Ryan et al. 2005). For instance, the individuals dropping out of
the study might be those who do not suffer decreased levels of well-being and those who stay
connected with the researcher are those who experience more anxiety than others due to
dispositional effects. Hence, this improvement might not lead to a quick development of a
solid theory.

Limitations and Future Research:

The length of unemployment and the concept of adaptation gained considerable attention.
Warr and Jackson 1987 found that well-being improved after 15-25 months of getting
unemployed (Winefield et al., 1989). An individual can adapt to unemployment by developing
interests and activities outside the labour market that help him decrease aspirations and
weight placed on employment.

Research also explored a number of individual differences that moderate the effects of
unemployment on well-being like gender and age. Research found that women are less
affected by unemployment as withdrawal to family chores seems like a natural choice.
Research also suggests that unemployment is less harmful on younger people than middle
aged people (Winefield et al., 1989). These evidences can inform our understanding of the
relationship between employment and well-being. However, the scope of this paper does not
cover it. Future research can explore how these variables affect well-being of people in
employment relationships.

Concluding Remarks:

The research on unemployment and well-being was successful in documenting a number of

negative effects of unemployment on the well-being of unemployed individuals. This research
contributes to increasing our understanding of the relationship between employment and
well-being.

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The contributions of the Latent Deprivation and the Agency Restriction models were
discussed in this paper. These models are based on the assumptions that unemployment
deprives individuals from a set of benefits provided by employment and that these benefits
meet some profound well-being needs. And hence, the deprivation results in deteriorated
well-being.

The Latent Deprivation Model provided that latent needs are more important than manifest
needs. The Agency Restriction Model contradicts this proposition arguing that deprivation of
financial resources results in limited personal agency and hence, decreased well-being.
Regardless of this conflict and the mixed evidence that these models continue to generate,
the models provided useful attempts of categorization and prioritization of well-being needs
in relation to employment.

These contributions can be informative to employers desiring to design interventions to

improve employees' well-being. What benefits to provide? What needs to address? Which
ones to address first? All of these questions are pivotal concerns that currently available and
future research in this field can inform.

Finally the intentionality concept provided by the Latent Deprivation Model was highlighted
as an exceptional contribution. Employers unintentionally provide, and manipulate, a set of
benefits that meet well-being needs. Hence, employers can unintentionally harm employees'
well-being. The available research does not propose the optimal levels or mixture of these
benefits. Nonetheless, it is hoped that future research gives this construct sufficient scrutiny.

References:

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Psychological Well-being Amongst Graduates in Early Career. Journal of Occupational and
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Creed P. A. & Klisch, J (2005) Future Outlook and Financial Strain: Testing the Personal Agency
and Latent Deprivation Models of Unemployment and Well-being. Journal of Occupational
health Psychology, Vol. 10, No. 3, pp 251-260

Creed P. & Machin M. A. (2003) Multi- Dimensional properties of the Access to Categories of
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Ervasti H. & Venetoklis T. (2006) Unemployment and Subjective Well-being: Does Money
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