Consequences of unemployment
- Created by: Eleanor Ansell
- Created on: 27-01-21 18:04
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- The consequence of u/m
- reduce international competitiveness
- high u/e reduces incentives for firms to invest in new tech that generally lead to increased export competitiveness
- this under investment also stems from a reduced need to invest in capital-intensive tech when there's lots of cheap u/e workers
- possible decline in labour supply as u/e move overseas
- high u/e reduces incentives for firms to invest in new tech that generally lead to increased export competitiveness
- high business taxes that firms have to pay to help finance the welfare benefits
- Info on Universal Credit: capped at £26K on the grounds that families living solely on benefits shouldn't get more than workers. Tories reduced the cap as part of their 2015 manifesto.
- erosion of job skills and work habits can lead to workers becoming unemployable
- employers perceive workers who've been economically inactive for years as risky.
- the economy begins to behave as if it's on its PPF even though there's plenty of unemployed workers available for work.
- an increase in AD and lead to inflation rather than to an increase in output and jobs
- free-market economists believe a certain amount of u/e is necessary to make the economy function better
- by providing downward pressure on wage rate, u/e can reduce inflation
- frictional u/e is beneficial bc workers can take time to search for the best job and firms have more choice of workers
- contributes to the widening of income differentials which are needed to promote incentives
- this creates the supply-side conditions in which the economy can prosper
- low incomes that accompany u/e lead to low standards of living
- the u/e become marginalised from normal economic and human activity and their self-esteem is reduced
- families suffer increased health risks, greater stress, a reduction in the quality of diet, increased risk of marital break-up and social exclusion
- fiscal budget costs e.g increase in G in healthcare to deal with depression, or in the police to deal with crime etc...
- opportunity cost e.g gov has to cut spending in other sectors to finance this increase in spending around u/e
- fiscal budget costs e.g increase in G in healthcare to deal with depression, or in the police to deal with crime etc...
- families suffer increased health risks, greater stress, a reduction in the quality of diet, increased risk of marital break-up and social exclusion
- slower long-run trend rate of economic growth
- reduce international competitiveness
- under-investment
- high business taxes that firms have to pay to help finance the welfare benefits
- Info on Universal Credit: capped at £26K on the grounds that families living solely on benefits shouldn't get more than workers. Tories reduced the cap as part of their 2015 manifesto.
- high business taxes that firms have to pay to help finance the welfare benefits
- Eleanor Ansell
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