Are Recessions Bad for Loneliness?

Loneliness is a pressing public health concern with significant economic, health and social consequences. This paper examines the impact of economic downturns, particularly unemployment and job loss perception, on loneliness in Australia. Using a fixed-effects panel regression applied to 19 waves of data, we find that unemployment is significantly linked to an increased likelihood of experiencing loneliness and other dimensions of social health, with the effects of unemployment on loneliness persisting for several years. Perceived job insecurity also contributes to social health deterioration, further emphasising the psychological impact of economic instability. Our estimates point towards the effects being especially strong among individuals with chronic health conditions or mental disorders, who may face added health-related costs and other stressors that exacerbate loneliness. These findings highlight the need to consider policies and programs that support social well-being during economic downturns, particularly for those at heightened risk.