In the 1960s and 1970s a number of views were formed about unemployment in developing countries, which have remained largely accepted since then. The views can be summarized as three propositions: a) the poor cannot afford to become unemployed; b) labour markets in developing countries are always sufficiently open and flexible for work to be found, so that c) unemployment is a reflection of the search for jobs with high earnings on the part of those able to finance search costs.

In contrast, the conclusions of this review are that the poor can be and are increasingly to be found in large numbers among the unemployed; many young people have great difficulty in finding any sort of work, especially regular work; unemployment is high and appears to have been rising over the past 20 years. In sum, in the light of this review of evidence, the conventional wisdom described in the so-called luxury unemployment hypothesis is seriously flawed and should be set aside.