Childhood psychological predictors of unemployment: Evidence from four cohort studies

Abstract

Recent research in economics and psychology has examined the childhood noncognitive skills which predict future economic success. However, there has been relatively little research on whether these skills predict future unemployment. This thesis uses data from four cohort studies (total N = 47,328) from Great Britain and the United States to examine how lifetime trajectories of unemployment are affected by childhood differences in self-control (chapter 3), conscientiousness (4), and mental health (5-6). These are some of the first studies to examine how pre-labor market measures of these psychological characteristics prospectively predict future unemployment. Chapters 3, 5 and 6 are the first studies to examine how early psychological characteristics interact with recessions to produce differential unemployment outcomes. After adjusting for cognitive ability and key sociodemographic indicators (e.g. gender, SES), all three of these psychological characteristics are found to predict future unemployment. The effects are statistically significant and economically meaningful, comparable in magnitude to the effects of intelligence. Chapter 3 shows that childhood with poor self-control were disproportionately more likely than their more self-controlled peers to become unemployed during the 1980s UK recession, and chapters 5 and 6 find a similar effect for children with high psychological distress compared to their less distressed peers during the 1980s UK recession and 2007 US recession. These studies demonstrate the value of using psychological research to examine economic outcomes. The chief policy implication is that interventions which improve childhood levels of self-control, conscientiousness and mental health may be an effective way to reduce future population unemployment levels. In the short term, remediation programs which take into account individual psychological differences may improve the efficacy of unemployment interventions, particularly during recessions when certain groups are more likely than others to become unemployed.