Benefits andd Costs to unemployment

Question 1

What are the benefits of unemployment?

Answer 1

-frictional unemployment is necessary to allow changes in what is produced to take place
💫 workers can move from declining to
growing
industry–>more productive and useful 4
economy
-unemployment keeps wage rates down makes costs lower and firms more competitive and can compete with other countries

Question 2

What are the costs of unemployment to individuals?

Answer 2

• lower living standards -if claim benefits it may be less than previous wages so SOL falls as they can buy less goods and services
• lower self esteem,family breakdown etc
• excluded workers:unemployed for so long that they become unemployable eg producers refuse because of lack of recent experience so become excluded from workforce
• larger cost to taxpayer in benefit payments

Question 3

What are the costs of unemployment to the Government?

Answer 3

-Labour resources wasted:when labour is unemployed this means that the economy could produce more than its producing which is a waste of labour resources

-unemployment leads to more unemployment:
unemployment –>cyclical unemployment->recession _-> increased gov spending to bring back and needs to use policies to bring this back

-increased government spending and tax revenue falls->bigger oppurtunity cost and budget deficiit

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Question 4

What is the cost to regions?

Answer 4

unemployment spread unevenly leading to depressed areas with social problems and increased crime rate_>lower standard of living