Unemployment and Organizational Commitment: Evidence from a Panel of Australian Manufacturing Firms

Higher unemployment increases the cost of job loss and heightens employees' feelings of job insecurity. The paper argues that these two effects could have a positive influence on employee organizational commitment. Using data from the Household, Income and Labor Dynamics in Australia (HILDA) microdata database, we find that employees in high unemployment regions are more committed to their organization, while the effect of unemployment on employee's commitment is stronger in the private sector.