Question

State the economic effects of unemployment.

Answer 1

Economic effects of unemployment: 

• Waste of human resources: Human resources are wasted due to unemployment in the country. These resources could have been used in the production activity of the economy. 
• Difficult to implement welfare schemes: Due to corruption and malpractices, it is difficult to implement various welfare schemes introduced by the government from time to time. 
• Poverty and Income inequality: Lack of employment leads to poverty and income inequality in the economy.
• Growth of informal sector: Due to unemployment, poverty increases in the economy which will attract the growth of informal sectors like smuggling, drug peddling, black marketing, etc. 
• High dependency ratio: When unemployment increases in an economy, it will lead to an increase in dependency ratio. 
• The unemployed group will become the burden on the employed group.