Unraveling the complex relationship between work transitions and self-esteem and life satisfaction

Transitions in and out of work are common experiences with major repercussions for people’s lives. The complex link between work transitions and psychological adjustment is not well understood, however. In this preregistered study, we analyzed 11 waves of longitudinal data from a representative sample of 13,671 Dutch participants to examine the transactional effects between repeated work transitions (employment and unemployment) and psychological adjustment (self-esteem and life satisfaction). We investigated change trajectories before and after the transitions and tested whether event-related characteristics moderated transition effects. Participants with lower levels of self-esteem and life satisfaction were more likely to experience unemployment and less likely to experience employment transitions, indicating selection effects. Participants decreased in their self-esteem and life satisfaction before the beginning of the unemployment transition, indicating anticipatory effects, with larger decreases in self-esteem for participants who ended up experiencing longer unemployment. We found no consistent effects of employment on changes in life satisfaction or self-esteem, but participants entering more satisfying jobs showed larger increases in life satisfaction. Results were mostly robust when accounting for gender, age, socioeconomic status, and the Big Five traits, and when using propensity-score matching. Effects did not differ among multiple experiences of the same transition. Together, these findings point to dynamic transactions between employment / unemployment and self-esteem / life satisfaction. Findings highlight the importance of closely assessing the specific timing of pre- and post-transition changes and the existence of large individual differences in reactions to work transitions that seem to be partly explained by event-related characteristics.