This study tests the contributions of the latent functions of employment (latent deprivation model; Jahoda, 1981: Jahoda, M. (1981). Work, employment and unemployment: Values theories and approaches in social research. American Psychologist, 36, 184-191), the manifest functions of employment (agency restriction model; Fryer, 1986: Fryer, D. M. (1986). Employment deprivation and personal agency during unemployment: A critical discussion of Jahoda's explanation of the psychological effects of unemployment. Social Behaviour, 1, 3-23) and personality (trait neuroticism) in accounting for psychological distress in the unemployed. Eighty-one unemployed individuals were assessed on measures of psychological distress (GHQ-12; Goldberg, 1972: Goldberg, D. P. (1972). The detection of psychiatric illness by questionnaire. London: Oxford University Press), the latent functions of employment (activity, time structure, social contact, status, collective purpose), financial strain, trait neuroticism, and a measure of labour market satisfaction. It was shown that the latent functions of employment and financial strain were each able to contribute significantly to the prediction of psychological distress over and above that predicted by Neuroticism, which alone also contributed significantly to the prediction of distress. Results are related to the latent deprivation and agency restriction models of well-being and it is argued that temperament needs to be considered in any explanation of the negative psychological effects of unemployment.