Unemployment is a critical problem and reflects one nation’s underutilization of human resources. Unemployment is one main problem every nation faces, whether highly developed and industrialized or deprived.
There are several definitions and explanations for unemployment. It can be defined as “the condition of having no job or being out of work” or the “Proportion of people who can work and actively search for jobs but are unable to find them.”
IMF report (1998) defines ‘unemployment is measured annually as a percentage of the labor force that can’t find a job.’ International Labor Organization (2001) defines unemployment as the situation for ages 16 or above of being out of work or needing a job and continuously searching for it in the last four weeks but being available to join work in the next two weeks.
The unemployed category does not include those who voluntarily do not work; it includes students studying full-time, retired, medically unfit, and children. However, all people without work, who are accessible and searching for work, are included as unemployed people.
Individual well-being (or happiness) depends on many things, including income, labor market status, job characteristics, health, leisure, family, social relationships, security, liberty, and moral values. Among the working-age population, unemployment is one of the most damaging individual experiences.
The immediate consequences of unemployment are (usually) a reduced income and increased time spent in non-labor market activities such as leisure. Consequently, the satisfaction level regarding income decreases, and concerning leisure time, it grows.
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Regarding the satisfaction level with main vocational activity, unemployment tends to have harmful psychological consequences, including loss of identity and self-esteem, increased stress from family and social pressures, and more significant future uncertainty regarding labor market status.
The satisfaction level with the financial situation of unemployed workers depends positively on other income sources, such as income-yielding assets, savings, and unemployment benefits. It depends negatively on the opportunity costs in terms of foregone earnings. The higher the alternative income and the lower the opportunity costs, the smaller the drop in financial satisfaction will be.
The psychological effects of unemployment are fewer if future job prospects are better or if one has more excellent moral support from family and society. Those with a working spouse are likely to feel less pressure and enjoy greater satisfaction with their primary work activity, income, and leisure. Family and social relationships also alleviate the stress and anxiety of job loss. For many, work provides essential sources of social relationships.
Therefore, unemployment satisfaction and health consequences also depend on the family and social circumstances surrounding unemployed individuals. There is some evidence that family and social support promotes satisfaction and physical health, while social isolation is detrimental (Berkman & Glass, 2000)
