Question

1.What are some of the real social costs that occur in a recession when unemployment is...

1.What are some of the real social costs that occur in a recession when unemployment is rising? Discuss crime rates, divorce rates and other social problems that tend to rise in a weak economy. What are the social costs of rising unemployment? Do you think unemployment compensation tends to increase frictional unemployment, the amount of time it takes the unemployed to find a new job?

Homework Answers

Answer #1

Rising unemployment causes lower disposable incomes, income inequality, higher crime rates, higher suicides, and lower happiness as social costs.

Divorce rates and crime rates increases in recession, as people become unhappier and depressed and anxious and stressful which leads to negative externalities.

Unemployment compensation causes workers and salaries individuals to relax more and seek higher time to search new jobs and get more lineant in job anticipation which causes higher time to search a new job and thus meanwhile frictional unemployment number rises.

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