Short-run and long-run effects of unemployment on suicides: does welfare regime matter?

Disentangling the immediate effects of an unemployment shock from the long-run relationship has a strong theoretical rationale. Different economic and psychological forces are at play in the first moment and after prolonged unemployment. This study suggests a diverse impact of short- and long-run unemployment on suicides in liberal and social-democratic countries.

We take a macro-level perspective and simultaneously estimate the short- and long-run relationships between unemployment and suicide, along with the speed of convergence towards the long-run relationship after a shock, in a panel of 10 high-income countries. We also account for unemployment benefit spending, the share of the population aged 15-34, and the crisis effects.

In the liberal group of countries, only a long-run impact of unemployment on suicides is found to be significant (P = 0.010). In social-democratic countries, suicides are associated with initial changes in unemployment (P = 0.028), but the positive link fades over time and becomes insignificant in the long run. Further, crisis effects are a much stronger determinant of suicides in social-democratic countries. Once the broad welfare regime is controlled for, changes in unemployment-related spending do not matter for preventing suicides.

A generous welfare system seems efficient at preventing unemployment-related suicides in the long run, but societies in social-democratic countries might be less psychologically immune to sudden negative changes in their professional lives compared with people in liberal countries. Accounting for the different short- and long-run effects could thus improve our understanding of the unemployment-suicide link.