The research team led by Arthur H. Goldsmith, the Jackson T. Stephens Professor of Economics at Washington and Lee University said that as the period of unemployment increases the effects often become chronic.
In the first phase of unemployment, people have a benign ignorance and think it will turn out fine, that they are not going to be emotionally damaged by this, because they'll just go out and get a job, said Goldsmith.
Approximately half of unemployed people do find a job in about five weeks, but he stresses that, even by five weeks you can see the changes. They begin to question themselves: 'Why was I selected to be unemployed?' 'Were my skills lacking?' 'Is there something about me that's problematic?' nd so begins the erosion of self esteem, which is such a very important part of our psychological well being.
He said that in addition to a diminished sense of self, those exposed to a few months of unemployment begin to exhibit higher levels of anxiety, depression, and lack of sleep.
And if the period of unemployed exceeds six to nine months or longer, the psychological effects often become chronic and have a long lasting effect.
Looking at longer periods of unemployment, say four to six months, we see statistically significant evidence of people becoming more externally focused and feeling helpless, he said.
What's really interesting is that this compromised sense of self becomes hardens and is better described as a permanent scar rather than a blemish.
Even when people become employed again, the adverse impact of unemployment on psychological well-being lingers, he added.
The researchers identified two different types of individuals: Those with an internal locus, who feel that they influence the things that happen to them, and those with an external locus, who believe that they don't have much control over their lives and that events just happen to them.
An important distinction between people with these differencing mind-sets is that person's with a more internal locus tend to be more motivated, since they see a tight connection between actions they take and life outcomes.
More highly educated people are the most vulnerable to the psychological ravages of unemployment because they tend to be more internally focused.
So when these people become unemployed they tend to attribute this to personal shortcomings which fosters helplessness and a compromised view of self, said Goldsmith.