Unemployment and reemployment effects on locus of control and health

While unemployment compromises wellbeing and health, reemployment can mitigate some of its negative effects. Yet, we lack understanding of the underlying mechanism through which these unemployment and reemployment effects occur. In the present study, we integrate models of unemployment, stress, and trait variability to argue that changes in locus of control play a crucial role in explaining health following unemployment and reemployment. Applying propensity score matching to a longitudinal sample of 7,908 individuals from the German Socio-Economic Panel (SOEP) reveals that unemployment predicts lower internal locus of control which in turn relates to poorer subjective health. Subgroup analyses show that the decline in internal control beliefs only occurs for involuntary (as compared with voluntary) unemployment. Reemployment reverses this negative effect on health through restoring internal control beliefs. Concluding, our study adds to the extant literature as it uncovers why health changes occur after job loss and job gain