ABSTRACT
One of the basic questions in economic theory is why modem economies are incapable of employing, folly and efficiently, their available resources. Unemployment of labor force seems to attract a greatest attention of researchers. Unemployed men cost society dearly. They may diminish their human capital through different kinds of ‘depreciation’. A high rate of unemployment is often associated with social unrest and high crime rates. Unused physical capital causes less attention than unemployed people perhaps because the former does not cause social troubles. In many countries, high unemployment is persistent. In 1995, for instance, the proportion of unemployed workers who had been unemployed for more than a year exceeding 30 percent in most European countries. It is one thing to be unemployed for a few days or even a few months; but quite another to be unemployed for a few years. Those who become longterm unemployed end up losing skills and work habits.
