Title: Effects of Unemployment | ROM Economics
Headings: Effects of Unemployment
Effects of Unemployment
What is unemployment?
What are its effects?
Key terms

Content: Higher training costs – As we have seen, many firms will benefit from lower wage costs as a result of unemployment. However, many firms may also have to spend more resources on training new employees because they have been out of work for so long. Training new employees uses up a firm’s time and resources and as a result most firms will see an increase in employment costs. On people: Lower standard of living – The people who are unemployed will suffer a loss of income and will either have to survive on private savings or on benefits. As a result, they will be able to buy fewer goods and services and will see a fall in their standard of living. Loss of skills – When someone becomes unemployed they will stop working and will start losing their skills and ability to work. The longer someone stays unemployed, the less employable they will be to firms because firms will need to spend money on retraining them. Loss of confidence/depression – People who are unemployed will also suffer a loss of confidence in their ability. Many people who become unemployed will also suffer stress related illnesses and depression.