This study (a) assesses whether employed young people, unemployed school-leavers, and unemployed young people who have working experience differ in their psychological well-being, that is stress, depression, and general feelings of happiness; (b) examines the effects of these three work: conditions on development and structure of identity; and (c) investigates the effects of identity structure on psychological well-being. The favorability hypothesis of social comparison theory seems fit to explain the relation between identity structure and psychological well-being.