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  Economic Problems Associated with Unemployment

Economic Problems Associated with High Levels of Unemployment

a) Cost to the Inland Revenue (or exchequer)

Each unemployed person is said to increase the price of the Inland Revenue in terms of allowance for the following: -

i. The unemployment benefit.

ii. Loss of the tax revenue from the unemployed.

iii. Cost of the special schemes for the unemployed people.

iv. The Administration.

b) Waste of Scarce Resources

Labour, unlike some raw materials, cannot be stored for future use. Unemployed/unused labour resources are lost for all times.

c) Inequality of Income Distribution

The gap in the level of standards of living between those not in of work and those in work widens during time period of severe unemployment.

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