Unemployment

Unemployment has obvious and well-documented links to economic disadvantage and has also been connected in some discussion to higher crime rates (Cantor and Land 1985; Ottosen and Thompson 1996), especially among the young (Britt 1994), suicide, and homicide (Yang and Lester 1994; Ottosen and Thompson 1996). Garry Ottosen and Douglas Thompson (1996) broaden the consequences of unemployment, relating it to increases in the incidences of alcoholism, child abuse, family breakdown, psychiatric hospitalization, and a variety of physical complaints and illnesses. Some researchers have emphasized the importance of preventing youth from falling into unemployment traps. Robert Gitter and Markus Scheuer (1997) suggest that unemployment among youth not only causes current hardship, but may also hinder future economic success. This is because unemployed youths are not able to gain experience and on-the-job training and because a history of joblessness signals that the individual may not have the qualities that are valued in the labor market.

Unemployment may impair the functioning of families (see, for example, Liker and Elder 1983; Barling 1990) by affecting the parents' interactions with their children and the interactions between partners. Although it has been shown that unemployed parents spend more time with their children, the quality of these interactions suffers in comparison with those of employed parents. Unemployment, particularly among male partners, is also likely to lead to major role changes in the home. For example, whether it is because they TABLE 1

have more time or they feel that they have to undertake additional household duties when they are no longer the financial provider for the family, unemployed husbands are more likely to increase their participation in domestic activities (e.g., household tasks, shopping, meal preparation). In some circumstances, the loss of financial responsibility among husbands may lead to discontent within the marriage: unemployed husbands are more likely to have disagreements and arguments with their spouses than are employed husbands, and this has the potential to lead to spouse abuse and marriage dissolution.

It is very difficult to place a dollar figure on many of the social costs that unemployment imposes on the individual, his or her family, and society. Given the gravity of the problems created, the cost would seem to be enormous. Attempts have, however, been made to estimate the economic cost associated with unemployment. Ottosen and Thompson (1996, p.5) noted that "the United States loses a little less than one percentage point of potential gross domestic product (GDP) or output for each one percentage point of unemployment. This implies that an unemployment rate of 7 percent costs the United States at least $400 billion annually in foregone output. This is more than $2,000 for every man, woman, and child over 16 years of age." Similarly, in Australia, Peter Kenyon (1998) calculated that the loss of GDP associated with an unemployment rate above the full-employment rate is the equivalent of one year's worth of GDP over the past two decades.

In addition to the loss of GDP, high unemployment increases the burden on social welfare programs. These include unemployment insurance programs and other types of welfare, such as food stamps, Medicaid, Medicare, and Supplemental Security Income (Ottosen and Thompson 1996). There are also intergenerational effects, as unemployment of parents will limit their capacity to finance the schooling of their children. As education is the primary means of social mobility, this intergenerational effect will give rise to an inheritance of inequality.