THE COSTS OF JOB-INSECURITY - RESULTS FROM SWITZERLAND

This paper is about the effects of unemployment on consumption behavio ur through ''job security'' in Switzerland. Based on a behavioural mod el of consumption the paper establishes the links between job security and consumption empirically. In a second step, perceived ''job securi ty'' as reported in the Swiss Consumer Survey is then connected with t he labour market. The paper finds that the record high level of unempl oyment since 1991 has mainly caused the observed deterioration of the perceived ''job security''. Two different scenarios of unemployment ra tes are then developed to show the quantitative effects unemployment h ad on perceived ''job security'' and finally through this measure of c onsumer confidence on consumption expenditures. In conclusion the unus ually 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.