this is the literature review
Unemployment
Unemployment is the proportion of unemployed people who are currently available for work. There are social and economic impacts of unemployment which can be harmful if unemployment rises above a certain percentage in an economy. One of the key drivers of the economy: consumer spending is lost when there is a high number of unemployed people (Aghion, 1996). Unemployment has a noticeable impact on the economy of a country. A high level of unemployment can also have many effects which can be seen in areas of families, crime and education among others.
Impact of Unemployment on Families
Unemployment has a devastating effect on families especially when there is a fruitless and prolonged search for another job. The economic security of families is affected negatively as the income required to cater for the resources of the families is unavailable. When there is a sole provider in a family who has been affected by unemployment, the whole family is adversely hit by the negative impacts of unemployment. Steady sources of income are essential for the fulfillment of the needs of families (Bradshaw, 1983). When there is a halt to the constant sources of income, the financial abilities of families is lost. As a result, families suffer psychological, social, and emotional disturbance.
One of the most common impacts of unemployment on families is the reduction of disposable income. With the setting in of unemployment, there is a drastic reduction in the disposable income of families. All the expenditures that may be major in families have to be cut down to allow adjustment with the little available money. The purchasing ability of families is also reduced with some of the most critical expenditures such as food being profoundly affected as cutting on the necessary spending leads to increased poverty. The family members, therefore, have to go through a lot of hardship to meet the needs of their families. The unemployment phase is also disheartening for families and directly or indirectly affects the prosperity and happiness of families.
The loss of families’ financial securities is also an impact of unemployment. Unemployment of the member of the family who is earning brings sudden changes in the lives of the other members of the family. There is the creation of stress and tension with the sudden loss of the financial security of families. The regular expenditures which were previously carried out by the members of the family have to be re-evaluated or stopped due to the change in the financial capacity of the family. The adjustment to this change becomes very difficult for the members of the family as the change maybe unexpected (Liem, 1988). For the families to survive in such condition, the necessity becomes searching for other sources of income which is difficult.
Another impact of unemployment is strained relationships in families. Money remains to be an essential thing to keep things flowing smoothly in families. With reduced or no cash in families, the provider of the family is under constant tension and stress. This disturbs the physical and emotional health of everyone in families. A mental frame of the mind that is disrupted leads to unending conflicts among partners in families. As a result, the mental framework of children in families is negatively affected. The relations among the members also become strenuous because of the friction created by the state of unemployment of the provider of the family.
Unemployment harms peace and happiness around the house in different families. This affects the children in the families as they are unable to put in the effort that is required for them to build a future. Housing issues have also been caused by unemployment. Families may need to start shifting to other houses which have a lower rent rate because the previous ones prove to be too expensive (Tarling, 1982). The families affected by unemployment and living in their own houses also face problems especially in paying up the installments of previously taken home loans. These housing related issues also hamper the overall lifestyles of families all through the unemployment period.
Another impact of unemployment on families is indulgence in illegal activities. Repeated failures in securing employment can make the members of families to carry out illicit activities to cater for the different needs of families. Quite often, unemployed people tend to resort in events that are illegal to make money as various options are running dry. As a result of little or no money in families, the unemployed members are likely to turn to alcohol and drug abuse. This has been seen as a way of running from the problems which are as a result of the lack of funds. The health and relationships of families, therefore, deteriorate as a result of the indulgence of family members in alcohol and drug abuse.
There is an increased susceptibility to a health problem in families. There is a significant rise in issues that are health-related as the members in families are deprived of nutritious food. The poor financial health in families leaves people with no funds for disease treatment. Lack of treatment of these diseases, in turn, leads to fatal outcomes. Unemployment is also responsible for triggering mental disturbances and depression in unemployed family members. The adverse effect on social acceptance of families is also an impact of unemployment. Children who are from families with unemployed parents are not considered at par with the other children of parents who are employed.
Loss of retirement security is an impact of unemployment. With job loss, money set aside for use after retirement comes to a stop. The retirement security is lost as families have no accumulated wealth to be used for expenditure after the earning family members retire. Unemployment that is long term also reduces the chances of buying a home at an old age and the chances of asset building. The dependence on government welfare programs by families has been as a result of unemployment. This increased dependence may make children lose interest in earning a living resulting in poor academic performance. The poor performance means minimized chances of securing employment in the future, and the cycle continues.
Impact of Unemployment on Education
One of the benefits of education is lowering the risk of unemployment. Unemployment has however contributed to the reduction of the benefits as unemployment and culture are interrelated. The decline of the incidences of unemployment is essential than the reduced unemployment duration in the creation of education differentials. The provision of quality education is dependent on the resources available both human and financial. The funds may be provided by individuals in families who are employed but these changes when the provider in the family is affected by unemployment.
Another impact of unemployment on education is the decrease in social input. School is highly dependent on society for content and resources to be taught in educational institutions. This has however been affected by unemployment. An increase in the level of unemployment results in decreased input by society to the education sector in an economy. Another contribution is in the financial form which is affected by unemployment in the economy. The education levels are since changed when there are increased levels of unemployment in the economy.
High levels of unemployment have an impact on the sector of education in different ways. Graduates have been forced to settle for jobs that are below their professional qualifications resulting in unemployment. Unemployment has since posted a challenge to graduates and has since affected the education of the graduates. Unemployment has an impact on the advancement of knowledge of semi-skilled and skilled individuals in the market. There is no possibility of education advancement since most of the graduates in the market are unemployed. This is because of the finances required to advance in education which is dependent on employment opportunities.
Unemployment has had an impact on the salaries of the worker with different educational qualifications. Those absorbed in the job market are unable to meet the required wages according to the levels of education. The lack of payment of wages equivalent to the output being brought out by workers is a form of unemployment. Such reduced payments are as a result of the impact of unemployment on education (Nickell, 1979).
Unemployment has a significant impact on education in terms of commercial catering of the training itself. Unemployment is related to a decrease in the quality of education being provided to different learners in learning institutions. Unemployed individuals cannot provide for learners who depend on these individuals for learning. An unemployed individual who depends on a job to provide for another individual’s education needs may affect the education of the other individual if fired or fails to secure a position. Children are therefore not able to complete their training and end up in the frustrating job market while still unskilled.
Impact of Unemployment on Crimes
There is an age-old hypothesis that the unemployment rate is directly proportional to the crime rate. This hypothesis has been supported by numerous statistical studies which have proved that unemployment is a significant contributor to the increase in crimes in different countries. However, no definite pattern shows that unemployment has an impact on crimes. A higher crime rate is linked to the unemployment state in the particular society. The unemployed workers with low skills tend to be more involved in crimes as compared to highly educated individuals (Chiricos, 1987).
One impact of unemployment is that it creates excellent disparities in incomes of the people in societies, in turn, resulting in increased crime rates. There is an economic and social impact of unemployment on crimes. Unemployment has impacted both positively and negatively on crimes. The positive effects of unemployment on crimes are called the criminal motivation effect with the adverse effect being known as the criminal opportunity effect. A higher unemployment rate increases the aggregated probability of committed crimes because unemployed people are more likely to be involved in crimes to maintain their living standards. The circulation of properties and people is also slowed down by unemployment with the increase in the unemployment rates leading to further slowing down.
When individuals stay for an extended period while being unemployed, the chances of securing a job continue decreasing making crime an option. A relative increase in the level of unemployment results in the leads to a corresponding increase in the crime levels. When people are laid off, it may result in criminal activities such as drug peddling, burglary, and other crimes to maintain their current standards of living (Crow, 1989). With the increase in the rate of unemployment, the crime levels also increase. A decrease in the unemployment rate on the other hand results in a reduction of crimes. Unemployment causes poverty which is a significant contributor to crimes. Poverty makes people resolve to crime as a source of income.
One significant impact of unemployment is on property crimes and social vices. Most people who engage in misconduct are not inherently criminals but tend to explore other options before engaging in crime, but the options tend not to satisfy the intended purpose. Research has shown that most unemployed people commit property crimes as compared to violent crimes. The property crimes decrease with a decrease in the unemployment levels, but this does not affect the violent crimes in any society. In addition to property crimes, unemployment has led to factors that have forced people to be involved in crime. Social vices which have been impacted by unemployment are also a high contributor to the increase in crimes in societies.
Unemployment is a criminal factor because the deterioration of living standards marks the unemployed individual. The emotional structure of unemployment is unstable, and the unemployed people are thus unable to control desires and thus influenced to commit criminal activities. Unemployment decreases the production of new items meant for human consumption as there is also a decrease in the rate of use — the reduced production results in the consumption of crime-related products by the unemployed people in society. In addition to the impact on the production of new items and use of crime-related products, unemployment has had an effect on labor market opportunities. The decrease in the number of occasions in the labor market has influenced increased crimes.
There is a strategic advantage of unemployment, especially for young vertical integrated firms. Outsourcing in these firms saves the costs of integrating that are associated with vertical integration. Vertical integration involves shouldering of risks by the vertically integrated firm where these risks range from different strategic operations of the firm. Outsourcing is an advantage in these scenarios because it typically carries risks and a much lower initial investment cost. One position is that outsourcing enables the vertically integrated firms to take advantage of the supplier’s lower factor costs thereby use the power of market forces to improve quality by driving costs down. Another advantage is that the firm can perform its activities effectively because its resources are now focused on sets of operations or competencies that are narrow.
Another impact of unemployment on crimes is the increased relative returns to activities that are illegal. This is because of the increased desperation associated with unemployment making them result in other activities that will bring about the needed income. Moreover, the unemployed workers tend to have less to lose in the event of incarceration or arrest thus making the crime rates to increase. Therefore, unemployment remains an essential determinant of the criminal offenders’ supply and the overall crime rate. The making of money through illegal activities such as drug dealing as a result of unemployment has become an increasing trend.
When people have a source of income that is legal, less criminal activities are committed. However, when people are unemployed, more criminal activities are undertaken. Unemployment is at times caused by recession whereby many people are laid off and wait for a long time to be recalled. When the recession takes longer, there is an increase in the number of unemployed people, and therefore, many people result from engaging in criminal activities. The people staying out of employment for a long time see crime as a last resort. Unemployed also has an impact on crimes that include rape and murder (Ammermüller, 2009). These crimes have been linked with increased rates of unemployment. Also, psychological problems such as drug and alcohol abuse have also been related to unemployment.
One of the common forms of unemployment is when persons are working at a prevailing wage rate but are not comfortable with their job. This makes the people despaired and hence turn to criminal activities; this is a significant impact of unemployment on crime. The desperation to cater for the same needs may trigger people’s desire to enter into crime.
The Costs from Economic and Social Point of View
The costs of unemployment from an economic and social point of view include costs to the government, personal costs, and costs to society. On personal costs, unemployment causes a loss of earnings. Long periods of unemployment can push households into poverty as employment is one of the biggest causes of poverty. There is also homelessness as caused by unemployment. Homelessness is a cost that has adverse effects on the part of the economy and even the society. Less income can result in having no income at all to meet the housing costs. The rates of homelessness are exuberated by unemployment (Taylor, 2002). There is also the possible cost on the economy linked to harms prospects.
Loss of human capital is an economic cost resulting from unemployment. When people are unemployed, they tend to miss out on training for jobs. Job training is an essential component of labor and human skills. Unemployment rates of the people reduce these skills and thereby the labor productivity also reduces. When people are unemployed for long periods, they tend to miss out on the latest trends and practices; this does affect not only an individual but also the economy (Taylor, 2002). As a result of missing out on the recent trends in the job market, people become unemployable in the future which increases the number of unemployed people in the society.
One of the standard economic costs of unemployment is increased government borrowing. Higher unemployment will cause a fall in the tax revenue of the economy as the people paying income tax are few. The spending on goods and services is also less hence a lower value-added tax. The government will also have to spend more on the related benefits of unemployment. The government does not only pay the gain related to unemployment but also the unemployed family will also be paid the housing benefit. This reduces the revenue in the economy while increasing the expenditure thereby having an adverse effect on the economy. On average, the cost of one unemployed individual is higher than the tax revenue that can be collected from them.
Lower GDP for the economy is another cost of unemployment on the economy of a country. High unemployment rates show that the economy is inefficient and is operating below the capacity. As a result of operating below the capacity, lower incomes and output is experienced (Layard, 2005). The unemployed people are unable to purchase goods and services as they do not have the purchasing power as they had before. The decreased purchasing power contributes to lower spending making money in circulation in the economy be possessed by a few individuals. A negative multiplier effect is also caused by a high level of unemployment in any economy.
Unemployment brings about two certain costs which are: political instability and an increase in social problems. Areas where high unemployment exists, especially youth unemployment, tend to have more vandalism and crime (Raphael, 2001). It can lead to alienation and difficulties when integrating the unemployed young people in society. Political instability is also another cost that comes with unemployment. Periods of mass unemployment tend to lead to social unrests and even raising the political temperatures in the country. An example is in Germany where the high unemployment rate contributed to the rise in the Nazi party and also Hitler. The political instability also affects other economic areas leading to additional incurred costs.
Social and economic costs do not provide a personal approach that comes close to that of an in-house party. There are also some other unanticipated costs. There is always the potential of hidden costs when there is another party or individual performing the tasks, or the individual is unemployed. Also, there are integration difficulties. Once the economy has been fully integrated, there is a problem of integration where plenty of financial backing will be required for the two parties: unemployed and employed during the process of transition.
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