examine whether unemployment is an economic problem or a social problem or both?
in what all ways can more employment be created?
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How is the economy affected by unemployment?
When someone loses a job, a family is affected. When many people lose their jobs, eventually the whole nation is affected. Workers lose income, while the country loses production and consumer spending. With such a strong impact, the unemployment rate is a key way to measure the state of the economy.
Unemployment is universally recognized as undesirable. While economists and academics make convincing arguments that there is a certain natural level of unemployment that cannot be erased, elevated unemployment imposes significant costs on the individual, the society and the country. 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. (Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate. Check out The Unemployment Rate: Get Real.)Costs to the Individual
The costs of unemployment to the individual are not hard to imagine. When a person loses his or her job, there is often an immediate impact to that person's standard of living. Prior to the Great Recession, the average savings rate in the U.S. had been drifting down towards zero (and sometimes below), and there are anecdotal reports that the average person is only a few weeks away from serious financial trouble without a paying job.
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.
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. Studies have shown that prolonged unemployment harms the mental health of workers and can actually worsen physical health and shorten lifespans.