question_answer

Distinguish between disguised unemployment and structural unemployment. Give two adverse effects of unemployment.                                                                                                                          [Foreign 2005]

Answer:

Refer to pts. 16 and 18 (Important Terms and Concepts). Adverse effects of unemployment are:

(i) Loss of valuable human resources

Unemployment means that some able and willing persons have not been able to get work- Since labour is an important agent of production, unemployed labour means unused human resources and consequently less than full production. This means lower national income and smaller per capita income.

(ii) Increase in poverty.

Unemployment and poverty go together when some people are unemployed and hence unable to contribute to production and income, they become dependent upon others. Sharing other peoples income in low income groups pushes people below the poverty line.