Measuring Unemployment

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  • Created by: kira
  • Created on: 10-04-12 16:49

The claimant count is where the unemployed are registered as able, available and willing to work in any suitable job, but cannot find employment.

Economic and Social costs of unemployment:

-Economic costs of unemployment:

An economy with high unemployment is producing under its production possibility frontier, it reduces the growth of the economy.

If is low, the national total output is high so there are improvements to the economic welfare. 

-Costs of unemployment to the government:

An increase in unemployment means higher benefit payments and lower tax revenue being received by the government. This is because the unemployed receive benefits and pay no income tax. 

High unemployment means less consumption in the economy, which means the government are receiving less indirect tax.

This all means there is an increase in government spending and a decrease in tax revenue, so there is an increase in borrowing by the government.

-Dead-weight loss of investment in human capital:
High unemployment means there is a waste in scarce resources that are used in training workers. Those who are unemployed for long periods of time become unskilled as their skills become dates in a changing job market.

-Social Costs of unemployment:

There is a link between high levels of unemployment and high levels of crime and divorce.

High unemployment means there is a decrease in real income and a decrease in consumption and rising income inequalities. This can mean that firms are less attracted to particular areas for investment because people will not spend their money


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