A person is considered unemployed when they are willing and able to work under existing employment conditions but are currently without a job.

  Individual and Social Consequences of Unemployment

Unemployment is a major social issue because it causes both economic hardship and psychological distress, and it represents a loss of productive resources for society as a whole. During the twentieth century, unemployment became one of the key concerns behind the development of welfare states. The experience of unemployment often differs according to social class. For individuals with lower incomes, unemployment is primarily associated with financial difficulties, whereas middle-class individuals may experience a greater loss of social status and identity. Since employment often provides people with a sense of purpose, identity, and self-worth, losing a job can seriously damage self-esteem and emotional well-being.

Research has shown that prolonged unemployment can lead to depression, pessimism, and social withdrawal. Marie Jahoda and her colleagues, in their classic study Marienthal: The Sociography of an Unemployed Community (1933), examined the effects of mass unemployment in an Austrian town after the closure of its main factory. They concluded that unemployment negatively affects social life, identity, and mental health by undermining important psychosocial functions such as time structure, social interaction, participation in collective activities, regular routines, status, and personal identity. Jahoda and her colleagues proposed a stage model of unemployment, suggesting that individuals typically move from initial optimism to resignation, despair, and eventually apathy as unemployment continues. The longer unemployment lasts, the more severe the psychological distress becomes, reducing motivation and energy to continue searching for work.

Mirra Komarovsky, in Unemployed Man and His Family (1940), explored the impact that widespread unemployment in the United States, during the Great Depression, had on family relationships. The research was done on a sample of 59 unemployed skilled manual workers and their families. Unemployment had a negative effect on a man's personality, authority, and marital satisfaction. The relationship with adolescent children is most affected by unemployment, followed by the relationship with the wife.

Other studies have shown that the psychological impact of unemployment is influenced by factors such as economic conditions, gender, age, social class, ethnicity, marital status, work involvement, and previous experiences of unemployment. In general, unemployed individuals experience poorer mental health than employed people. Although poor mental health can increase the likelihood of becoming unemployed, most research indicates that unemployment itself is a major cause of declining mental well-being.

David Fryer’s agency theory emphasizes that individuals are active agents striving to achieve personal goals and realize their potential. According to Fryer, unemployment damages mental health because it limits people’s ability to pursue meaningful goals and exercise control over their lives. The extent of psychological harm, therefore, depends on how strongly unemployment restricts personal agency and opportunities for self-realization.

Sheila Allen, in her book The Experience of Unemployment (1986), presents data that show the connection between unemployment and personal and social problems: health problems, suicides, marriage breakdowns, the rise of racism, and hooliganism. Paul Willis studied the impact that rising unemployment had on young people in Britain in the early 1980s. He came to the conclusion that in areas where there is high unemployment, the vast majority of young people experience long-term poverty, and delays in leaving their parents' homes and forming marriages, which lead to their isolation, frustration, demoralization, and family conflicts.

                           Measurement of Unemployment

Unemployment statistics are affected by several important measurement problems. Official definitions of unemployment generally require individuals to demonstrate that they are actively seeking work. However, this excludes discouraged workers—people who are willing and able to work but have stopped searching because they believe no jobs are available. Another challenge involves disguised unemployment, a concept originally associated with developing countries, where people engage in low-productivity agricultural work due to the absence of better employment opportunities. More recently, economists have also applied the term to involuntary part-time or temporary workers who would prefer stable full-time employment. In addition, frictional unemployment occurs naturally in labor markets because matching workers with available jobs takes time, even when sufficient jobs exist.

                              Variations in Unemployment

Globally, unemployment has remained high, with rates around 6.3 percent, or approximately 200 million people, in 2006. However, official figures often fail to capture the large amount of informal work, especially in developing countries, meaning that many officially unemployed individuals may still participate in some form of economic activity. Young people between the ages of 15 and 24 accounted for 44 percent of the unemployed population, while significant gender inequalities persisted, with employment rates much lower among women than men. Unemployment levels also vary considerably by region: East Asia had relatively low unemployment rates, while the Middle East and North Africa experienced the highest levels. National differences can be even more dramatic, as shown by very high unemployment rates in countries such as Zimbabwe and Zambia compared to lower rates elsewhere in Southern Africa.

Unemployment rates differ significantly across social groups. Young people, ethnic minorities, women, and older workers often experience higher unemployment than prime-age men. Ethnic minorities, in particular, face disproportionately high rates of long-term unemployment, with minority youth especially vulnerable. A substantial proportion of young unemployed people remain unemployed for extended periods, illustrating the unequal social impact of unemployment across populations.

                      Structural Causes of Unemployment

Unemployment is closely linked to the business cycle. Rates typically rise during economic recessions and decline during periods of economic growth. Historically, unemployment in industrialized countries was lower during the postwar economic boom between 1950 and 1973 than during the interwar years or the decades after 1973. Structural changes in the economy, such as the decline of manufacturing and the rise of service-sector employment, also contribute to unemployment as workers from declining industries struggle to transition into new forms of work.

John Maynard Keynes, in his The General Theory of Employment, Interest, and Money (1936), proposes a new economic theory that supposes that there is a trade-off between inflation and unemployment. According to this theory, if the economy is operating at full employment, increasing government spending to stimulate demand will lead to inflation. On the other hand, if the economy is in a recession, increasing government spending can help to reduce unemployment without causing inflation.

Milton Friedman tried to refute the Keynesian view of unemployment, so he introduced the concept of the "natural rate of unemployment". Friedman argued that attempting to reduce unemployment below its natural rate through monetary policy would only result in temporary gains and inflation in the long run. This idea challenged the prevailing notion that governments could sustainably achieve full employment without consequences.

In The Condition of Postmodernity (1989), David Harvey explores the consequences of the development of postfordism and new information technologies on the economy and culture. Postfordism has led to the flexibility of work, which is characterized by lower employment permanence, an increase in temporary and part-time jobs, a reduction in labor rights and benefits, and a reduction in the chances of obtaining pension and health insurance. Labor flexibility is associated with flexible accumulation - high structural unemployment, a large service sector, halting wage growth, and declining size and union influence.

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