Bowling alone or bowling at all? The effect of unemployment on social participation

Abstract

This article examines the impact of unemployment on social participation using German panel data. We find negative and lasting effects for public social activities but also a retreat of individuals into private life. Issues of selection and endogeneity are addressed by using plant closures as exogenous entries into unemployment. Social norms and labour market prospects are shown to be relevant for explaining these findings. Our results advance the understanding of the consequences of unemployment for human well-being, highlight an hitherto unexplored channel through which unemployment influences economic outcomes (via changes in social capital) and point to an alternative explanation of unemployment hysteresis based on access to information.