The Summary of the Costs of Unemployment

THE SUMMARY OF THE COSTS OF UNEMPLOYMENT

Some people believe that recessions are neither good nor bad but simply part of the natural survival of the fittest in the business world. Actually, it is not true. In The Costs of Unemployment, the authors tell us both the good and bad influences of recessions.

Recessions will cause unemployment because of the loss of output and GNP. Some people may argue that unemployment is Ў°a part of the functioning of the economyЎ±. They are partly right, for the unemployment is inevitable because of the dynamic economy. This kind of unemployment is called natural rate of unemployment©¤the sum of frictional and structural unemployment. However, this is only a part of unemployment. Because the firms Ў°cut back and produce lessЎ± when they experience recessions, they will employ fewer workers. Therefore, the unemployment rate rises. This increase in unemployment caused by recessions and depressions is called cyclical unemployment.

Recessions cause social consequences. During the recessions, the unemployed

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suffers a lot. The authors say that many people lost their savings as the stock market

crashed and thousands of banks failed. What they can depend on is only the meager relief distributed by the government. In addition, Ў°prolonged unemployment may also bring with it a number of social and person ills: anxiety, depression,