Effects of unemployment

• Economic costs of unemployment:

  • Opportunity cost
    • economy not working at full capacity (limits eco growth)
  • Lower living standards
    • low purchasing power & disposable incomes
  • Loss of skills (Hysteresis)
    • prologued unemployment → less confident with skills.
      • (i.e. falling out of ur prime lol)
  • Government costs
    • welfare
  • Lower wage growth
    • greater supply of workers → firms pay less

• Social costs of unemployment:

  • Increased inequality
    • unemployment often occurs among low income earners
  • Loss of self-esteem
    • reduced motivation
    • may increase Hidden unemployment