Moral consequences of becoming unemployed

Abstract

We test the conjecture that becoming unemployed erodes the extent to which a person acknowledges earned entitlement. We use behavioral experiments to generate incentive-compatible measures of individuals’ tendencies to acknowledge earned entitlement and incorporate these experiments in a two-stage study. In the first stage, participants’ acknowledgment of earned entitlement was measured by engaging them in the behavioral experiments, and their individual employment status and other relevant socioeconomic characteristics were recorded. In the second stage, a year later, the process was repeated using the same instruments. The combination of the experimentally generated data and the longitudinal design allows us to investigate our conjecture using a difference-in-difference approach, while ruling out the pure self-interest confound. We report evidence consistent with a large, negative effect of becoming unemployed on the acknowledgment of earned entitlement.