Unemployment and Identity

This paper employs social identity and self-categorization theories as a useful heuristic framework through which to learn more about the nature of the misery experienced by the unemployed; in economic terms, the individual cost of unemployment. Utilizing this framework, the paper provides different empirical identification strategies in order to disentangle the various means through which unemployment alters both the well-being and utility of an individual and shows, by reviewing some of the recent research in which I have participated, that unemployment primarily threatens an individual’s identity rather than reducing the instantaneous utility derived from day-to-day experiences.