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Studies investigating the causes of poor psychological health during unemployment have tended to neglect the role played by financial hardship. This study made use of government‐led reductions in the amount of welfare benefits paid to unemployed Australian youths to investigate the possible psychological impact of reduced income during unemployment. Samples of 161 and 201 unemployed youths were obtained before and after the changes were made, respectively. Although respondents in the latter sample received less money from welfare benefits, their overall level of income did not differ from that of the first sample. Analyses showed that respondents reported a range of weekly incomes, from a variety of sources. Correlational analyses on the combined samples showed that the subjective level of financial strain experienced, but not the actual amount of income received, was independently associated with psychological well‐being. Lower incomes were not associated with a greater commitment to obtaining a job or a lower level of structured time use, though higher levels of financial strain were associated with both. It is suggested that financial strain mediates the effect of low incomes on psychological health, activity levels, and commitment to obtaining employment.
Philip Ullah (Sat,) studied this question.