Worse yet, most of the costs are of the dead loss variety where there are no offsetting gains to the costs that everyone must bear.
Geoff Riley FRSA has been teaching Economics for over thirty years.
He has over twenty years experience as Head of Economics at leading schools.
Most economists argue that there will always be some frictional unemployment of perhaps 2-3% of the labour force.
There are still large regional differences in unemployment levels which causes significant economic and external costs.
Studies have shown that prolonged unemployment harms the mental health of workers and can actually worsen physical health and shorten lifespans.
The social costs of unemployment are difficult to calculate, but no less real.Prolonged unemployment can lead to an erosion of skills, basically robbing the economy of otherwise useful talents.At the same time, the experience of unemployment (either direct or indirect) can alter how workers plan for their futures — prolonged unemployment can lead to greater skepticism and pessimism about the value of education and training and lead to workers being less willing to invest in the long years of training some jobs require.On a similar note, the absence of income created by unemployment can force families to deny educational opportunities to their children and deprive the economy of those future skills.Last but not least, there are other costs to the individual.Elevated crime makes sense because, absent a wage-paying job, people may turn to crime to meet their economic needs or simply to alleviate boredom.The volunteerism decline does not have an obvious explanation, but could perhaps be tied to the negative psychological impacts of being jobless or perhaps even resentment toward those who do not have a job. economy produces goes to personal consumption and unemployed workers.Even for those eligible for unemployment benefits and other forms of government assistance, it is often the case that these benefits replace 50% or less of their regular income.That means these people are consuming far less than usual.However, the economic consequences can go beyond just less consumption.Many people will turn to retirement savings in a pinch, and draining these savings has long-term ramifications.