• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Discuss the economic consequences of unemployment

Extracts from this document...


Discuss the economic consequences of unemployment As the level of Unemployment is at a new high, the consequence this is having is becoming more and more obvious. Having a huge workforce willing to work without making good use of them is a waste of resources. This has an impact on factories and manufactures because by not using the labour force they are limiting their ability to produce more goods and provide more services. This would make living standards higher; however these unemployed workers are not being put to work. By not employing workers the government has to pay a state benefit to these people, which is reducing their overall profit. By reducing the government's profit, we are preventing them from spending the profit on improving education, care, transport or health. This effectively limits our standard of living and prevents it from improving. In order for the government to actually prevent themselves from actually losing money they would have to raise taxes to afford to pay for all of the unemployed. ...read more.


Many then have to declare bankruptcy and the government then has to continue to pay out. If the parents of a child are made unemployed their lifestyle is also affected, and if the parents have to feed a large family on minimum wage poverty can begin to occur. Children will not be provided with all the food they need and general standards of living will rapidly decrease. A low standard of health also increases the strain on NHS and other health services and begin to work in poor conditions. This will lower the expectations of children and cause them to underperform. They will be less likely to have their own study area, have the concentration to work or to even not go to school. This will in turn increase the unemployment rate and will result in a rapidly decreasing economy. One of the costs of unemployment can be unemployment itself. This is known as hysteresis. ...read more.


A 3% unemployment rate is not considered to be a problem as there are always people between jobs, or taking time off temporarily. On the other hand a 10% unemployment rate is likely to be a problem as this would then begin to prove a strain on government money and would raise taxes. Not only the percentage of unemployment, but the length of unemployment rates also needs to be considered. For example an unemployment rate at 20% for 3 months would not be as bad as an unemployment rate of 13% for 3 years. This is because the consequences will build up over time. Generous unemployment benefits reduce the costs of unemployment but they have an opportunity cost for the economy. Of course there are always disadvantages but there are minor benefits that come with unemployment that people discard; such as the ability to choose from thousands of workers rather than a select few. But the strains it can cause on the government and the cuts that have to be made are usually drastic. ?? ?? ?? ?? Sam Burton ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Markets & Managing the Economy section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Here's what a star student thought of this essay

3 star(s)

Response to the question

This essay engages with all the main points relevant to this question, however there are places where the analysis could be more detailed. When the question uses a command word such as "discuss" or "comment" that is prompting you to ...

Read full review

Response to the question

This essay engages with all the main points relevant to this question, however there are places where the analysis could be more detailed. When the question uses a command word such as "discuss" or "comment" that is prompting you to make an evaluative statement. This could be an exploration of which consequences are most significant, or to what extent unemployment is always unfavourable. It was a shame not to see any evaluation in this essay, and so this essay would not gain the highest marks. Whenever you talk about unemployment, you must discuss what causes the unemployment to gain evaluative marks.

Level of analysis

The analysis in this essay is sound, but there is room for improvement. The first paragraph does well in addressing the problem of wasted resources due to unemployment, however it was a shame not to see efficiency discussed. I always like to get a diagram into an economics answer, so If I was answering this question I would've included a PPF (production possibility frontier) showing where a state of unemployment is. The progression through the points is strong, as each step of the analysis is explained clearly. This shows the examiner a strong understanding of the consequences, as you show why each stage occurs. However, they have missed out on talking about international competitiveness. This theme could feature in all points. For example, a waste of resources means that UK firms are less productive and so their products are more expensive on the international market. Increased spending on benefits and social security has an opportunity cost of spending on education, which would increase productivity. If other countries are investing in education, the UK will fall behind internationally. Being able to link an argument to all of the points would be strong! The hysteresis paragraph is particularly strong, as this is a concept which is often confused. Both negative and positive consequences are considered throughout, but once again elaborations could be made. For example "The existence of high unemployment levels may also discourage workers for asking companies for raises, thus saving the company money" shows good awareness of a benefit. I would've put a simple statement saying that this puts less upwards pressure on wages, and thus inflation.

Quality of writing

This essay lacks an introduction, which would've been a good opportunity to define unemployment and why it occurs. This would've naturally allowed the discussion of the significances of different causes, gaining evaluative marks. Also, a clear introduction would've showed the knowledge and understanding necessary early on. There is some attempt at a justified judgement in the conclusion, saying there are benefits and negatives. This is where the essay needed to talk about the significance of a consequence, possibly concluding that this is why low employment is a macroeconomic objective. Spelling, punctuation and grammar are strong.

Did you find this review helpful? Join our team of reviewers and help other students learn

Reviewed by groat 04/03/2012

Read less
Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Markets & Managing the Economy essays

  1. Marked by a teacher

    Essay: Discuss whether the Basic Economic Problem will ever be solved

    3 star(s)

    It seems that only rich countries' citizens have all their needs and most of their wants satisfied, whereas in the poorer countries the people have to go without most of both their wants and needs.

  2. Discuss whether the privatisation of British Rail has been successful. Evaluate whether the new ...

    Looking at all this is would be tempting to say that safety has deteriorated since privatisation and that may be true, but how significant are the changes. There were major train crashes in the era of nationalisation and we cannot hark back to some sort of golden age before privatisation.

  1. what is economics

    demand schedule can be gained from past records and questionnaires, where customers are asked on issues like price. * Notable points: * Notable Points o Normal Inverse relationship o Linear relationship o Relationship only applies to holidays in June o Can extrapolate data: * At �325, 900 holidays will be

  2. Free essay

    Characteristics of poverty in the UK

    The main reason why there are such a high number of children in poverty is because so many lone-parents do not work and generally children with only one parent are usually in income poverty. This is extremely bad because children are the most vulnerable to all kinds of problems and

  1. . . . the provision of speed cameras is a source of government failure ...

    This therefore suggests that as it is a public good, the government should provide the speed camera due to a free market not providing it. So perhaps it is in the government?s best interest to provide speed cameras to prevent market failure, so as the government is providing this public good, government failure has not occurred.

  2. Explain the causes of Absolute & Relative Poverty in the UK

    An increase in unemployment therefore increases poverty. It follows that absolute poverty can best be reduced by fast and sustained economic growth and by creating jobs, hence the causes behind absolute poverty are lack of (job) opportunity and lack of economic growth. Economic growth can also create the wherewithal, if the electorate and state are so minded,

  1. Explain three reasons why labour markets may be imperfectly competitive

    No ? Income inequality in the UK, male and female discrimination, G should be able to reduce these wage difference such as through legislation. Also, G should help the poor people, enforcing minimum wage (ev point, may lead to G failure, min wage on monopsony firm, lead to greater unemployment, Pizza hut, unintended consequences)

  2. Outline the main features of a market economy and compare them to a command ...

    in favelas where not all of them have what we call the basics for living, e.g. electricity and running water. Having a market where only demands are catered for means that those who are poor wouldn?t be able to afford the healthcare which we all take for granted, consequently if

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work