Fears and realisations of employment insecurity

We investigate the validity of subjective data on expectations of job loss and on the probability of re-employment consequent on job loss, by examining associations between expectations and realisations. We find that subjective expectations data reveal private information about subsequent realisations both of job loss and of subsequent re-employment. We also compare the use of verbal and numerical descriptors for subjective probability scales. As predictors of subsequent job loss, the expectations data perform better with numerical than with ordinal verbal descriptors. On average, employees overestimate the chance of losing their job; while they underestimate the difficulty of job replacement. We recommend that survey items on employment insecurity should be explicit about each risk under investigation, and utilise a cardinal probability scale with discrete numerical descriptors.

► We examine the validity of subjective expectations of job loss and re-employment. ► Subjective expectations reveal private information about subsequent realisations. ► We compare alternative measures for subjective probability scales. ► Expectations data are measured better with numerical than with ordinal descriptors. ► Workers are over-pessimistic about job loss and too optimistic about re-employment.