Economic Costs of Unemployment
- Unemployment Rate.
This is the % of people in the labour force without a job but registered as being willing and available for work
- Labour Force
Those people holding a job or registered as willing and able to work
Therefore this is the number employed plus number unemployed
- Participation Rate
The % of the population of working age declaring themselves to be in the Labour Force. This will exclude groups such as
- long term disabled,
- Women bringing up children
Economic Costs of Unemployment
- Loss of earnings to the unemployed
- Those who are unemployed will find it more difficult to get work in the future (this is known as the hysteresis effect)
- Stress and Health problems of being unemployed
- Increased govt borrowing (PSNCR). Tax revenue will fall because there is less people paying income tax and VAT. Also the govt 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.
Revision Notes on Unemployment
Which is Correct? - Monetarist or Keynesian View
Unemployment Essays
- Explain what is meant by Natural Rate of Unemployment?
- What Can Cause Natural Rate of Unemployment to Change over time?
- Should the Main Macro Economic Aim of the Government be Full Employment?
