Good for the soul: The relationship between work, wellbeing and psychological capital

Research shows that unemployment negatively affects a person's wellbeing, which in turn can impair their ability to regain employment. Studies also suggest a person's ‘psychological capital’ (PK) (personality traits that influence the productivity of labour) influences the impact of unemployment on wellbeing and facilitates re-employment. This paper combines various economic and psychological theories of unemployment, and using 2004 cross-sectional data from Australia, tests the hypothesis of a simultaneous relationship between employment status and wellbeing and the mediating role of PK. Results support a simultaneous relationship and the partial mediating effect of PK. Individuals with poor PK are at greater risk of being unemployed.