Economic Effects Of Unemployment Essay

affected by the severe effect of unemployment. When there is longer period of unemployment for a person, the difficulty will be more for a person to get out of the unemployment vicious cycle. There would be a self-perpetuating effect when there is chronic unemployment. The reason for chronic unemployment is that the employers they do not find unemployed persons as attractive. The unemployment rate increases the unemployment financial costs. The nation and the government of the economy suffer. The government has to pay some form of employment benefits to the person who are unemployed. The greater the period of unemployment in the economy the more is the amount of money that the government has to provide. The nation not only losses from decrease in production but there is some additional

The spending power of the unemployed reduces when there is insecurity about the jobs and rise in the taxes. A rise in the unemployment rate has a significant impact on the economic factors like the health costs, income of a person, quality health care and the standard of leaving. Thus, the indicator unemployment rate should be kept as lower as possible.

The government of any country tries to keep the rate of inflation low but positive. The reason for this is that a continuous rise in the inflation rate has a damaging effect. The risk of higher level of inflation is that there is a regressive effect on the families with lower income in the society. This causes the price to rise for the food and the domestic utilities. When there is cut in the wages, a rise in the inflation would cause fall in the real income of the labourer. When there is high inflation, there might be rise in the rate of interest for business and the people who require loans and mortgages as the financial market helps in protecting themselves from the rise in the prices and increases the borrowing costs. The pressure on the government also