Job Loss

Job loss is a stressful life event in which employees involuntarily lose their current job, marking the start of a state called unemployment. Historically, job loss has gained research attention from several academic disciplines including economics, sociology, and psychology. From the psychological perspective, job loss research can be categorized into two major streams. The first research stream concentrates on documenting the detrimental impact of job loss. The second research stream focuses on how unemployed individuals cope with job loss and related institutional efforts that assist in the coping process.

Detrimental Impact of Job Loss

A large body of research has linked job loss to reduced psychological well-being (e.g., increased depressive symptoms, reduced self-esteem and perception of competence, elevated anxiety and hostility, lowered life satisfaction, increased suicidal attempts, and worsened relationship with family members and friends). Research also shows that individuals who have lost their job may experience a decline in their physical well-being as well (e.g., increased self-report of physical symptoms as well as actual symptoms). In addition, some empirical evidence suggests that unemployed individuals’ well-being is improved shortly after they are reemployed.

  1. Jahoda theorized that work serves several manifest and latent sociopsychological functions. An example of manifest function is earning income, while an example of latent function is the social identity endowed by employment. Job loss places these critical functions in significant jeopardy, which in turn leads to reduced well-being. R. H. Price has similarly argued that both economic hardship and eroded identity are two critical mediators of the above job loss-well-being link.

Coping With Job Loss

According to a recent meta-analysis conducted by F. M. McKee-Ryan, unemployed individuals who possess some key characteristics or factors tend to cope with job loss relatively better than those who do not. These key characteristics include the following: lower career commitment-involvement, more positive self-regard, greater social support, greater financial resources (both objective and perceived), better time structure (able to organize time so as to retain the sense of purpose in life), internal attribution (blaming others for job loss), higher reemployment expectation, and more job search activities. These characteristics were similarly conceptualized by J. C. Latack in her career transition model as factors that enable unemployed individuals to transform job loss into career growth.

It is worth noting that government, unions, and organizations have been increasingly proactive in recent years in helping unemployed individuals (or soon to be unemployed) to better adjust to job loss through combined effort in legislation, government policies, and benefit and training programs. Research suggests that such efforts are modestly effective.

Future Directions

With continued globalization and shifts of economic focus, job loss will remain an important topic in vocational psychology. Future researchers should implement longitudinal designs more frequently and obtain larger samples. Interdisciplinary research that goes beyond the psychological perspective is greatly needed. Additionally, job loss research in non-Western societies should prove promising in advancing both theory and practice.


  1. Caplan, R. D., Vinokur, A. D., Price, R. H., & van Ryn, M. (1989). Job seeking, reemployment, and mental health: A randomized field experiment in coping with job loss. Journal of Applied Psychology, 74, 759-769.
  2. Latack, J. C., & Dozier, J. B. (1986). After the ax falls: Job loss as a career transition. Academy of Management Review, 11, 375-392.
  3. Latack, J. C., Kinicki, A. J., & Prussia, G. E. (1995). An integrative process model of coping with job loss. Academy of Management Review, 20, 311-342.
  4. Leana, C. R., & Ivancevich, J. M. (1987). Involuntary job loss: Institutional interventions and a research agenda. Academy of Management Review, 12, 301-312.
  5. McKee-Ryan, F. M., Song, Z., Wanberg, C. R., & Kinicki, A. J. (2005). Psychological and physical well-being during unemployment: A meta-analytic study. Journal of Applied Psychology, 90, 53-76.

See also: