Discuss the economic consequences of unemployment

Authors Avatar

Discuss the economic consequences of unemployment?

In this essay the economic benefits and consequences of unemployment will be discussed. Unemployment can be defined as the percentage of the working age group willing and able to find employment but without work.  It can be separated into five categories; cyclical deficient, classical, structural, frictional and seasonal unemployment.

There are two methods for measuring unemployment. Firstly, the claimant count measure adds up all those claiming unemployment benefits. It is cheap and easy to collect however; it is not very accurate and exaggerates the unemployed figure as many claimants are untruthful thus exaggerating the unemployment rate. In contrast the International Labour Organisation measure is more expensive but also more accurate. The main advantage of the ILO is that it can be compared with other countries directly.

Firstly, unemployment will lead to an economy producing under the PPC showing inefficiency and a waste of resources which will do little good to the basic economic problem of unlimited demand and limited resources. However, unemployment improves labour mobility as there is a greater pool of workers who are keen to gain the necessary skills needed for employment. This benefits the economy as firms have a greater variety of workers to choose from. This increases efficiency as the best skilled workers selected use the capital to produce the maximum possible output.

Join now!

Unemployment causes work skills to be lost as people learn best by experience and by training in work. Therefore the long term unemployed lose basic work skills. This leads to increasing difficulty finding employment the longer the worker is unemployed. In spite of this time out from employment allows workers to retrain or rethink their careers by benefiting from government training and education schemes. Over time this may enable them to find more rewarding jobs and increase their contribution to the economy.

Unemployment leads to lower earnings and living standards among the unemployed. The health of workers ...

This is a preview of the whole essay

Here's what a star student thought of this essay

This essay has a good structure, defining the key terms in the introduction and coming to a solid conclusion. The introduction sets up a structure of discussing the five types of unemployment, yet this is not followed through. I would've thought that'd be a good way to tackle this question as it'd lend itself to evaluation of which cause is most detrimental to the economy! The style is strong, linking steps together, allowing for a convincing argument. Spelling, punctuation and grammar are strong.

The analysis in this essay is strong, as each mechanism is explained fully. For example, the paragraph about unemployed losing skills doesn't just assert that long term unemployment is bad, it explains why this is the case. I would've liked to have seen the technical term hysteresis used here! I particularly liked how each paragraph explores the possible benefits. By including benefits in each paragraph, the arguments becomes balanced and prepares well for a justified judgement. However, as mentioned above this essay doesn't go into evaluation. In my opinion, the essay could benefit from a diagram as this shows analytical skills. A good place would be when mentioning the production possibility frontier, as it's easy to show a shift in position and representing an increase in unemployment. Showing such skills will ensure you gain the easy marks available! I think international competitiveness needed to be elaborated upon, as this is arguably a huge cost of unemployment.

This essay engages well with the question, explaining the consequences of unemployment, however there is no discussion. When the command word is discuss, there needs to be some evaluation of what the consequences depend upon. For example, I would be looking deeper into the level of unemployment and its severity, or what's the cause of unemployment, and what consequences become most significant in the long and short term. Without such evaluation, the highest marks could not be gained. If this essay had simply been "Explain the consequences of unemployment" then this essay would've done it superbly!