Q.Explain the economic and social consequences of unemployment.

Unemployment costs an economy twice — once in lost output, and again in the resources spent coping with its social effects.

Unemployment's consequences fall under two heads:

Economic consequences:

1. Loss of potential national output — the goods/services the unemployed could have produced are never created.
2. Lower household income, feeding into and perpetuating poverty.
3. Reduced savings and investment, which in turn slows future job creation.
4. Increased fiscal burden on government, from welfare and employment-generation spending.
5. Wastage of investment already made in the unemployed person's education and training.

Social consequences:

1. Rising poverty and widening inequality between the employed and unemployed.
2. Psychological distress and loss of self-esteem, especially among educated youth.
3. Increased social tension and crime linked to economic desperation.
4. Rural-to-urban migration, adding pressure to urban housing and civic infrastructure and often ending in insecure informal work. …