One of the most consistent findings in social science research is that unemployment is associated with a wide range of negative health and social effects. This is true across time and place, with unemployment related to outcomes such as low wellbeing, poor physical health and weak levels of social capital. Importantly, there are two crucial findings in the literature on unemployment. First, unemployment often has a causal effect; many unemployed people are not predisposed to poor health or low wellbeing but experience them as a consequence of losing paid work. Although as the previous two chapters show, the opposite is also true, poor health can lead to job loss. Second, these effects are linked to both material and social factors. Unemployment has negative effects because of low income but also because of social and psychological factors that are encountered, irrespective of economic ones, such as loss of social contacts, routine and structure, self-esteem etc. These two findings have profound implications for social policy. If unemployment causes negative effects because of its economic and social environment, it follows that a qualitative change in this environment has the capacity for such effects to be changed, even ameliorated. One way in which the unemployment environment can be transformed is through active labour market policies (ALMPs). Using Understanding Society and its predecessor the British Household Panel Survey, this research examined whether ALMP participation was associated with higher levels of subjective wellbeing, physical health and social capital (such as social interaction and community participation) compared to ‘open unemployment’. The findings showed that ALMP participants are significantly more likely to report higher wellbeing than nonparticipating unemployed people, supporting the majority of other research into ALMPs and psychosocial states. Yet in relation to both physical health and social capital, there were no positive ‘ALMP effects’ for participants.