Economics – Government and the macroeconomy - Employment and unemployment | e-Consult
Government and the macroeconomy - Employment and unemployment (1 questions)
Login to see all questions.
Click on a question to view the answer
Structural unemployment is a significant concern for a country's economy for several reasons:
- Reduced National Income: Unemployed individuals are not contributing to the economy, leading to a decrease in overall national income (GDP). This represents a loss of potential output.
- Increased Government Expenditure: Governments face increased expenditure on unemployment benefits and welfare programs to support those who are unemployed. This places a strain on public finances.
- Skills Gaps and Lower Productivity: A persistent pool of structurally unemployed individuals indicates a skills gap within the workforce. This can hinder economic growth and productivity. Businesses may struggle to find qualified workers, limiting their expansion potential.
- Social Costs: Long-term unemployment can lead to social problems such as poverty, crime, and decreased social cohesion. It can also negatively impact individual well-being and mental health.
- Reduced Tax Revenue: Fewer people working means less income tax collected by the government, further impacting public finances.
Addressing structural unemployment is therefore crucial for maintaining economic stability and promoting sustainable growth.