If demand is stimulated too much, the main risk is rising inflation Full-employment does not mean zero unemployment!
There will always be some frictional unemployment – it may be useful to have a small surplus pool of labour available.
Elevated crime makes sense because, absent a wage-paying job, people may turn to crime to meet their economic needs or simply to alleviate boredom.
The volunteerism decline does not have an obvious explanation, but could perhaps be tied to the negative psychological impacts of being jobless or perhaps even resentment toward those who do not have a job. economy produces goes to personal consumption and unemployed workers.
Worse yet, most of the costs are of the dead loss variety where there are no offsetting gains to the costs that everyone must bear.
(Depending on how it's measured, the unemployment rate is open to interpretation. Check out The costs of unemployment to the individual are not hard to imagine.
Demand and supply-side policies need to work for unemployment to fall.
Simply boosting demand if the root cause of unemployment is structural is an ineffective way of tackling the problem.
Geoff Riley FRSA has been teaching Economics for over thirty years.
He has over twenty years experience as Head of Economics at leading schools.
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