Economics
Consequences of Unemployment
Unemployment has significant consequences, including reduced consumer spending, lower tax revenues, and increased government spending on social welfare programs. It can also lead to social and psychological issues, such as increased stress, depression, and a sense of hopelessness. Additionally, long-term unemployment can result in skill depreciation and reduced future earning potential.
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7 Key excerpts on "Consequences of Unemployment"
eBook - PDFSocial Policy Review 25
Analysis and Debate in Social Policy, 2013
- Ramia, Gaby, Farnsworth, Kevin(Authors)
- 2013(Publication Date)
- Policy Press(Publisher)
A recession affects many more people than those currently out of work, for there are many other ways in which the effects of unemployment impinge on the rest of society and its institutions (Sinfield, 1981, ch 5; forthcoming). High unemployment affects the distribution of resources, power and opportunity among different groups and classes in society. The extent to which ‘liability to unemployment or insecurity of tenure’ is ‘the distinguishing feature of the proletarian estate’ (Briefs, 1937, quoted in Lockwood, 1958, p 55) can still reinforce and even widen class divisions and social and economic inequality. The shift in the balance of power between the employer and the worker is significant. Those with less bargaining power in the labour market, including minority ethnic and religious groups, become even more vulnerable to exclusion and deprivation. The risk of low pay and poor working conditions is increased and may have further impact on those on the margins or even outside the labour market (Bambra, 2011). This is not to say that the maintenance of high employment is sufficient to avoid such problems, but for many it can be a necessary requirement. Many basic social policies such as equal opportunity to work depend upon unemployment being kept low for their success. Even if it is not the cause of a problem, it can impede measures to tackle it, which depend upon sufficient demand and fair access to employment opportunities (Reubens, 1970). However, experience over time and across countries confirms that the impact of unemployment on wider society can be significantly modified (Cantillon, 2009).The ways that society, its institutions and its members respond to changes in unemployment may be critical (Therborn, 1986; White, 1911). This is why emphasis in this chapter has been placed on how governments frame economic and labour market problems in ways
- G.C. Harcourt(Author)
- 2019(Publication Date)
- Routledge(Publisher)
11 An Aspect of the Economic Role of Unemployment R. E. Hall MASSACHUSETTS INSTITUTE OF TECHNOLOGY INTRODUCTION Economic thought on the role of unemployment has evolved in the past decade from the view that unemployment is a simple waste of resources to the view that at least some unemployment is privately and socially beneficial because it yields a better match between jobs and workers. The papers by Phelps, Holt, and Mortensen in the famous volume, Microeconomic Founda-tions of Employment and Inflation Theory (1970) have been especially influential in bringing about this change in thinking. The literature on the microeconomics of unemployment has not settled the issue of the optimality of the equilibrium level of unemployment present in an unfettered competitive economy. The extreme view that the private and social costs and benefits are precisely equal is not widely held. In his thoughtful review of the subject (Tobin, 1972), James Tobin has observed that the process of job search involves externalities associated with congestion and queuing, but is uncertain 'whether the market is biased toward excessive or inadequate search' (p. 8). My purpose in this paper is to study one specific externality in considerable microeconomic detail. The externality arises from the effect of unemployment in the market on the hiring and firing policies of employers. Earlier empirical work of mine has suggested the following hypothesis, which Arthur Okun has picturesquely called the 'spare tyre theory': firms in chronically tight labour markets try to minimise turnover by holding overhead labour during temporary reductions in demands for their products. The costs of recruiting in tight markets motivates this policy. In chronically slack markets, on the other hand, firms treat the unemployed as a readily available buffer stock from which they can draw whenever labour is needed. They do not hold overhead labour because recruiting labour when it is needed is inexpensive.
eBook - PDFDoing Time
An Introduction to the Sociology of Imprisonment
- R. Matthews(Author)
- 1999(Publication Date)
- Palgrave Macmillan(Publisher)
The definition of unemployment has been widely contested in recent years and there are a number of competing definitions cur- rently circulating. It has been repeatedly redefined and there have been 32 changes in the way the unemployed are counted for official purposes over the last two decades (Levitas, 1996). Alongside the official counts there are a number of independent measures. Some of these focus on the number of jobs available, some on the number of people registered as unemployed, and some on the number of people actually looking for work at any particular time. The variation among the different measures is considerable. In April 1997 the official figures stated that the level of unemployment stood at 1.7 million. The figures produced by the International Labour Organisation put the figure at 2.4 million, while they estimated there were a further 2 million people who wanted work but could not find employment. These figures, it should be noted, do not include part-time or tempo- rary work, those who have retired, or those claiming long-term sick- ness benefit. Irrespective of which particular measure is used, these studies give little or no consideration to the meaning of unemployment among those who experience it. As the anomie theorists point out, unemploy- ment will be experienced by different individuals and groups in differ- ent ways. Some will feel depressed and withdrawn, others may engage in sub-economies, while others may turn to crime. Whether unem- ployment is voluntary or enforced, or short-term or long-term can have a profound effect on how it is conceived and experienced. Whether or not unemployment is experienced as problematic will be dependent to some degree on the level of personal, social and econ- omic support individuals receive.
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
but who do not have jobs KEY CONCEPTS AND SUMMARY 21.1 How Economists Define and Compute Unemployment Rate Unemployment imposes high costs. Unemployed individuals suffer from loss of income and from stress. An economy with high unemployment suffers an opportunity cost of unused resources. We can divide the adult population into those in the labor force and those out of the labor force. In turn, we divide those in the labor force into employed and unemployed. A person without a job must be willing and able to work and actively looking for work to be counted as unemployed; otherwise, a person without a job is counted as out of the labor force. Economists define the unemployment rate as the number of unemployed persons divided by the number of persons in the labor force (not the overall adult population). The Current Population Survey (CPS) conducted by the United States Census Bureau measures the percentage of the labor force that is unemployed. The establishment payroll survey by the Bureau of Labor Statistics measures the net change in jobs created for the month. 21.2 Patterns of Unemployment The U.S. unemployment rate rises during periods of recession and depression, but falls back to the range of 4% to 522 Chapter 21 | Unemployment This OpenStax book is available for free at http://cnx.org/content/col12122/1.4 6% when the economy is strong. The unemployment rate never falls to zero. Despite enormous growth in the size of the U.S. population and labor force in the twentieth century, along with other major trends like globalization and new technology, the unemployment rate shows no long-term rising trend. Unemployment rates differ by group: higher for African-Americans and Hispanics than for whites; higher for less educated than more educated; higher for the young than the middle-aged. Women’s unemployment rates used to be higher than men’s, but in recent years men’s and women’s unemployment rates have been very similar.
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
Governments may need to rethink the design of their programs that offer assistance to unemployed workers and protections to employed workers so that they will not unduly discourage the supply of labor. Similarly, governments may need to reassess rules that make it difficult for businesses to begin or to expand so that they will not unduly discourage the demand for labor. The message is not that governments should repeal all laws affecting labor markets, but only that when they enact such laws, a society that cares about unemployment will need to consider the tradeoffs involved. 210 Chapter 8 | Unemployment This OpenStax book is available for free at http://cnx.org/content/col12190/1.4 Unemployment and the Great Recession In the review of unemployment during and after the Great Recession at the outset of this chapter, we noted that unemployment tends to be a lagging indicator of business activity. This has historically been the case, and it is evident for all recessions that have taken place since the end of World War II. In brief, this results from the costs to employers of recruitment, hiring, and training workers. Those costs represent investments by firms in their work forces. At the outset of a recession, when a firm realizes that demand for its product or service is not as strong as anticipated, it has an incentive to lay off workers. However, doing so runs the risk of losing those workers, and if the weak demand proves to be only temporary, the firm will be obliged to recruit, hire, and train new workers. Thus, firms tend to retain workers initially in a downturn. Similarly, as business begins to pick up when a recession is over, firms are not sure if the improvement will last. Rather than incur the costs of hiring and training new workers, they will wait, and perhaps resort to overtime work for existing workers, until they are confident that the recession is over.
- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
Governments may need to rethink the design of their programs that offer assistance to unemployed workers and protections to employed workers so that they will not unduly discourage the supply of labor. Similarly, governments may need to reassess rules that make it difficult for businesses to begin or to expand so that they will not unduly discourage the demand for labor. The message is not that governments should repeal all laws affecting labor markets, but only that when they enact such laws, a society that cares about unemployment will need to consider the tradeoffs involved. 184 Chapter 7 | Unemployment This OpenStax book is available for free at http://cnx.org/content/col23729/1.3 Unemployment and the Great Recession In the review of unemployment during and after the Great Recession at the outset of this chapter, we noted that unemployment tends to be a lagging indicator of business activity. This has historically been the case, and it is evident for all recessions that have taken place since the end of World War II. In brief, this results from the costs to employers of recruitment, hiring, and training workers. Those costs represent investments by firms in their work forces. At the outset of a recession, when a firm realizes that demand for its product or service is not as strong as anticipated, it has an incentive to lay off workers. However, doing so runs the risk of losing those workers, and if the weak demand proves to be only temporary, the firm will be obliged to recruit, hire, and train new workers. Thus, firms tend to retain workers initially in a downturn. Similarly, as business begins to pick up when a recession is over, firms are not sure if the improvement will last. Rather than incur the costs of hiring and training new workers, they will wait, and perhaps resort to overtime work for existing workers, until they are confident that the recession is over.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- White Word Publications(Publisher)
This struggle and the unemployment it produces benefit the system by reducing wage costs for the owners. For Marxists the causes of and solutions to unemployment require abolishing capitalism and shifting to socialism or communism. In addition to these three comprehensive theories of unemployment, there are a few types of unemployment that are used to more precisely model the effects of unemployment within the economic system. The main types of unemployment include structural unemp-loyment which focuses on structural problems in the economy and inefficiencies inherent in labour markets including a mismatch between the supply and demand of laborers with necessary skill sets. Structural arguments emphasize causes and solutions related to disruptive technologies and globalization. Discussions of frictional unemployment focus on voluntary decisions to work based on each individuals' valuation of their own work and how that compares to current wage rates plus the time and effort required to find a job. Causes and solutions for frictional unemployment often address barriers to entry and wage rates. Behavioral economists highlight individual biases in decision making and often involve problems and solutions concerning sticky wages and efficiency wages. History Because it has not always been acknowledged or measured systematically, there are limited historical records on unemployment. Industrialization involves economies of scale that often prevent individuals from having the capital to create their own jobs to be self-employed. An individual who cannot either join an enterprise or create a job is unemployed. As individual farmers, ranchers, spinners, doctors and merchants are organized into large enterprises, those who cannot join or compete become unemployed. Recognition of unemployment occurred slowly as economies across the world Indus-trialized and bureaucratized.
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