Cause And Effect Of Unemployment Essay

1086 WordsFeb 12, 20125 Pages
The Cause and Effect of Unemployment Rising unemployment may lead to a reduction in the supply capacity of the economy. If workers remain unemployed for sustained periods they may lose their skills, thus reducing their human capital. High rates of long-term unemployment in the economy may mean there is a mismatch between those skills that workers possess, and those for which there is demand. I believe that unemployment in your 20s has a huge effect on living standards for people in their 50s. (3)This includes: increased health risks (particularly for long term unemployed) (3), Stress or having a healthy or unhealthy diet, and increased risk of marital break-up. The longer the duration of unemployment; the lower the chances of finding fresh employment. Also losing income involuntary has a major impact. Many people have major commitments (mortgage, credit agreements) that fall in real living standards. Other things being equal, the greater the amount of goods and services produced, the greater the labor required for production. Because economic growth and employment go hand in hand, regulation and taxation that discourage the operation of business will also reduce the demand for labor. Many entrepreneurs are faced with regulations that force allocation of resources away from production. For example, rather than purchasing raw materials needed for final production, managers must instead purchase equipment mandated by OSHA or EPA. Or, rather than using clerks to expedite sales, they must use clerks to fill out forms required by the government. Regulations and taxes may have an especially strong impact on smaller businesses, since they have less access to capital markets than larger enterprises. When fewer small businesses are started and when larger firms curtail expansion, jobs that otherwise might be created never come to be. Regulations sometimes

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