Economic Costs of Unemployment

The economic and social costs of unemployment, including personal costs, costs to government and costs to society in general.

Loss of earnings to the unemployed.
Lost output to the economy. Unemployment represents an inefficient use of resources and social inefficiency.

Those who are unemployed will find it more difficult to get work in the future (this is known as the hysteresis effect) The long-term unemployed may become demotivated and leave the labour market altogether.

Stress and Health problems of being unemployed. Unemployment is often the most stressful experience.
Increased drug use. The Prince’s Trust’s 2010 Youth Index found that 11% of
unemployed young people responding to their online survey said that they had
“turned to drugs/alcohol.” (TUC report)

Increased government borrowing. Tax revenues will fall because there is less people paying income tax and VAT. Also the governmentt will have to spend more on unemployment benefits.

Lower GDP for the economy, the economy will be below full capacity this is inefficient and will lead to lower output and incomes.
Increase in social problems. Areas of high unemployment (especially youth unemployment) tend to have more crime and vandalism.
The unemployed, especially the young unemployed, may be more likely to resort to crime due to low income and feelings of social depravation. The unemployed are also more likely to be victims of crime and burglary.
Growth in inequality and relative poverty within society. According to TUC, 64% of the working age adults in families where one or more of the adults are
unemployed are poor. (costs of unemployment)

Related

Fast Delivery By Email!