From Marianthal to Latent Growth Mixture Modeling: A Return to the Exploration of Individual Differences in Response to Unemployment

Job-loss is a rapidly growing concern as we witness the greatest and most rapid economic downturn in a century. The negative psychological effect of unemployment has increasingly garnered attention. Previous literature has offered a formidable prognosis, stating that in response to job-loss, people typically follow a pattern of rapid decline in life satisfaction and never return to preunemployment levels. In this paper, we attempt to search for individual differences in response to job-loss using Latent Growth Mixture Modeling (LGMM) framework. By building homogeneous trajectories within a prospective design from 3 years before to 4 years after job-loss, we find that the majority of individuals (82%) demonstrate no long-term effects on life satisfaction in response to unemployment. We also examine the roll of larger market forces on levels of life satisfaction during and around the event of job-loss. Using a correlation model, demonstrated that life satisfaction is positively influenced by the regional unemployment rate. Clark (2003) argues that people report higher well-being when they lose their job if those in proximity to them are also becoming unemployed. Using the national and local unemployment rate in a regression model nested in the Latent Growth Model, we found that a social comparison effect is present immediately before unemployment but not once individuals became unemployed. This implies that people reference national and local employment trends in an attempt to anticipate their own course of employment rather than referencing those trends after job-loss.