Personal costs. Unemployed people often feel rejected and humiliated. This can lead to stress, drug and alcohol abuse, and depression.
Social costs. Social economists acknowledge that there is a direct relationship between high unemployment and crime. Welfare agencies suggest that there is also a direct relationship between unemployment and domestic violence and family breakdown.
Inequitable distribution of income. Higher unemployment means more people are receiving transfer income and fewer people are receiving factor income. This could increase relative poverty and exacerbate the 'haves and have-nots' mentality.
Wasted productive potential. High levels of unemployment indicate that an economy is not achieving its productive potential. Also, as the number of long-term unemployed (people unemployed for more than a year) increases, skills are lost.
Budgetary problems. High unemployment means large sums of money are paid by the government in the form of unemployment benefits. At the same time, high unemployment means less income tax revenue. Also, the government may be forced to spend more on health, social welfare, law enforcement and retraining schemes because of the associated problems with unemployment. This often forces the government into a series of budget deficits that can cause a number of economic problems, such as inflation and high interest rates.
Social costs. Social economists acknowledge that there is a direct relationship between high unemployment and crime. Welfare agencies suggest that there is also a direct relationship between unemployment and domestic violence and family breakdown.
Inequitable distribution of income. Higher unemployment means more people are receiving transfer income and fewer people are receiving factor income. This could increase relative poverty and exacerbate the 'haves and have-nots' mentality.
Wasted productive potential. High levels of unemployment indicate that an economy is not achieving its productive potential. Also, as the number of long-term unemployed (people unemployed for more than a year) increases, skills are lost.
Budgetary problems. High unemployment means large sums of money are paid by the government in the form of unemployment benefits. At the same time, high unemployment means less income tax revenue. Also, the government may be forced to spend more on health, social welfare, law enforcement and retraining schemes because of the associated problems with unemployment. This often forces the government into a series of budget deficits that can cause a number of economic problems, such as inflation and high interest rates.
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