Unemployment

Conceptual Overview

Unemployment is a phenomenon that has accompanied the development of capitalist society since its beginning. Its study is important for the economy and for organizations because it represents a lack of coherence between the activity of the latter of these and the reproduction needs of the workforce. The unemployment phenomenon has been most directly researched within economic theory, and there is a void in its study by organizational theory, linking it with fundamental organizational variables such as structure, size, context, culture, power, and so forth. Nonetheless, in the arena of empirical research of unemployment, there are many studies in the fields of social psychology, industrial organization, and applied sociology.

To explain the causes of unemployment, three paradigms stand out in economic theory: the neoclassical, which emphasizes the rigidities of the market and labor legislation; Keynesianism, which attributes unemployment to insufficient demand for goods and services, resulting in underemployment or cyclical unemployment; and Marxist theory, which underlines that technological progress generates an industrial army of unemployed workers, leading to indigence and creating technological unemployment.

Contrary to Marx, Leontief thought that technology contributed to increase the well-being of the workers but warned of the possibility that technological unemployment would stop being a benign volunteer state and convert into a virulent involuntary phase. For Hicks, unemployment is linked to the instability of the capital goods industry, and Hicks emphasized that the disease of unemployment is infectious and can be transmitted to other countries through foreign trade.

In the field of industrial organization, the effect of the power of the market has been researched as potential cause of unemployment, and profit-sharing has been proposed as a cure for unemployment. In addition, there are numerous journal articles on the impact of technological change and the work process in unemployment. Within social psychology, there are many studies on the negative effects of unemployment on family relations and on mental health. According to Rohall, on the individual level, being unemployed is associated with the loss of mattering (a dimension of our self-concept referring to how important we think we are to others) over time, probably because the unemployed no longer represent a major source of income support for their families, whereas respondents with more social interaction report higher levels of mattering. Argyris linked unemployment to general intolerance between worker and employer, leading to the fracture of the preconditions for any future psychological contract.

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