Unemployment is an anti-cyclical phenomenon that spikes after recessions. For a long time, unemployment has been considered a phenomenon incompatible with equilibrium that requires the absence of market clearing in the labor market. The models examined so far had well-functioning competitive markets or contracts offered by financial intermediaries. In this chapter, we examine situations in which markets and contracts are not available and trade happens in a bilateral and random manner, making the interaction genuinely strategic. Strategic interaction generates externalities among traders that make resource allocation inefficient. Moreover, coordination failures can emerge, giving rise to multiple Pareto-ordered equilibria with different levels of economic activity. Unemployment emerges due to the frictional nature of the labor market in which companies and workers negotiate the wage to divide the gains from trade.