Three aspects of the psychological consequences of long-term unemploym
ent are reviewed. First, the impact of long-term unemployment upon the
psychological well-being is outlined. Different longitudinal studies
in various countries show a significant deterioration of the psycholog
ical health of the unemployed, which stabilizes after a certain period
of time. This stabilization of the mental health at a lower level of
well-being is caused by a process of adaptation: The long-term unemplo
yed adapt to their new role and withdraw from the labour market by low
ering their employment commitment and their job seeking behaviour. In
the second part of this review, we show that the probability of findin
g work decreases because of this adaptation process. In the third part
of this article. research on the psychological impact of re-employmen
t is reviewed. It shows that the psychological well-being of the previ
ously unemployed improves strongly once they find work. Long-term unem
ployment thus creates a vicious circle. It leads to the deterioration
of the mental health. This deterioration can be stopped by adapting on
eself to unemployment. This adaptation however, reduces the probabilit
y of finding work, while only re-employment re-establishes the psychol
ogical well-being at the pre-unemployment level.