On the basis of a demand—resource model and a bio-psycho-social model, the present article analyses the physiological and psychological impact of unemployment.Recent investigations show that unemployment can cause adverse psychological and physiological health effects. The mechanisms behind these effects and which other modifying factors are involved are, however, unclear. In a combined cross-sectional and longitudinal study, psychological and physical effects of this critical life event were analysed and an attempt was made to deduce possible mechanisms. It could be shown that psychological (life quality, mood, coping strategies) and physiological (serum cortisol concentration, body mass index, medical status and physiological capacity) parameters deteriorated with time. Thus psychological and physiological health can be considered as a resource in the terms of the Demand-Resource model; improvement in this balance leads to better coping with unemployment. Because of the association with time, preventive measures should be taken at an early stage to counteract deterioration of health and to improve the ability of the individual to compete on the job market.