The costs of job‐insecurity ‐ results from Switzerland

This paper is about the effects of unemployment on consumption behaviour through “job security” in Switzerland. Based on a behavioural model of consumption the paper establishes the links between job security and consumption empirically. In a second step, perceived “job security” as reported in the Swiss Consumer Survey is then connected with the labour market. The paper finds that the record high level of unemployment since 1991 has mainly caused the observed deterioration of the perceived “job security”. Two different scenarios of unemployment rates are then developed to show the quantitative effects unemployment had on perceived “job security” and finally through this measure of consumer confidence on consumption expenditures. In conclusion the unusually high number of unemployed have acted as a psychological shock to change the subjective assessment of “job security” to such a degree that significant changes in consumer behaviour have resulted.