Unemployment and Suicide in Highly Protected Labour Markets

Why is the suicide rate much more sensitive to changes in the unemployment rate in some countries than in others? Using insights from the literature on labour market segregation, the current study proposes that unemployment has more severe consequences for people in societies with a high standard of worker protection. Employers in such labour markets may be more risk averse in hiring unemployed workers, and therefore unemployment in these societies may be a more definite or enduring exit from the labour market.  Moreover, in societies that contain also a large group of protected labour market insiders, this contrast may be painful for the unemployed. Their reference group in these societies may still be the well-protected employee, whereas unemployed in non-segregated (mostly overall low-protection) labour markets have generally lower expectations and reference groups. The expectations are tested using time series cross-sectional regression analysis techniques on 33 countries from 1960 to 2012. As an indicator of the degree of potential labour market segregation, countries’ Employment Protection Legislation (EPL) strictness index of the OECD was used. Results indeed show that the suicidogenic impact of higher unemployment rates is more dramatic in high protection countries than in low protection countries. This suggests that the unemployed in high protection countries have a hard time dealing with becoming one of the highly protected again, and possibly of finding reemployment at all.