Navigating Unemployment Without Unemployment Insurance: Evidence From Singapore

ABSTRACT

This study investigates the short‐term impacts of unemployment among older workers (aged 50–62) in Singapore, a setting without public unemployment insurance. Using monthly panel data from the Singapore Life Panel, we analyse dynamic effects on major life outcomes such as income, spending, health, and subjective wellbeing over 2 years post‐unemployment. Our findings reveal substantial initial earnings losses with incomplete recovery: income remains 50.7% below pre‐unemployment levels after 24 months. Despite this persistent income gap, total household expenditure declines by 9.8% on average over 2 years (ranging from 7% to 16% across months). The implied two‐year marginal propensity to consume is about 0.182, smaller than estimates in countries with more extensive social insurance, consistent with partial self‐insurance mechanisms. We observe increased retirement and self‐employment but no significant spousal earnings response. While health status remains largely unchanged, we find substantial declines in life satisfaction.