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Long-term Effects of Short-term Unemployment

Author: XuJuan
Tutor: JiangGuangDong
School: Dongbei University of Finance
Course: Labor Economics
Keywords: short-term unemployment youth unemployment hysteresistheory long-term effects
CLC: F241.4
Type: Master's thesis
Year: 2013
Downloads: 3
Quote: 0
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Unemployment is recognized as the world’s most challenging problem of society. In the past10years, the global economic recession, high unemployment rate became a major feature of the world economy. As the economy rebounds and this high unemployment phenomenon did not improved. In particular, there is a lot of youth unemployment, which are mostly structural unemployment, cyclical unemployment and many of them showed as short-term unemployment, making Chinese economy even the world economy has a hysteresis phenomenon, and the specific performance of this is the duration of short-term unemployment keeps a tendency of protract. This article focuses on the positive or negative long-term effects of this kind unemployment. Positive effects of which are:short-term unemployment can activate the market, thus creating a competitive advantage, and this can also make the young workers increase their investment in human capital, make the human capital stock of the whole society promote. Negative effects are: first, the short-term unemployed will make the well-being of unemployed persons decreased, affecting their physical and mental health development. A person’s well-being affected by many factors, such as income, job characteristics, health, leisure, family, social relations, and security, etc., but there is no doubt that the revenue occupy a very important role. In the working-age population, the most damaging factor for the well-being is unemployment, a series of mental illness and physical health problems are affected by unemployment, so the fact that whole well-being of unemployed youth is poor, was generally recognized. Secondly, the individual will lose part of the work experience, which leads to lack of human capital accumulation, even affect their work confidence, lead to some gap between he employed and the unemployed and the long-term competition in the labor market is not sufficient. Such as:the accumulation of working experience will be reduced, thus underinvestment in human capital. Summary of work experience brings human capital accumulation is particularly important for young people, which is even greater than the importance of school education, but too much short-term youth unemployment makes many young people lost their work opportunities for human capital accumulation, also makes their own human capital subject to a certain degree of derogatory. Thirdly, it will affect the social security system seriously. The number of unemployed young people has been great, this will have an impact on the pension fund, even the traditional concept of retirement is shaken. This type of short-term unemployment will exacerbate social inequality and then cause a certain resistance to economic development of china.These long-term effects is produced has its profound reasons, in this paper, we will discuss from two aspects to explanation this phenomenon of long-term trend of sort-term unemployment. One hand is the "insider-outsider" theory which tresulting in imperfect competition in labor market and the other is the loss of human capital, work experience and other derogatory conduct job search. Since the existence of the labor market "insider-outsider" theory’s conditions, so employment will be decided within the influence. For those just entering the labor market will face unemployment of young people, which apparently belongs to the external one, by the labor market to a certain extent unfair effect. In addition, for any one of the unemployed, the job search process more or less will make the stock of human capital disparaged, the erosion of skills, technological progress and the confidence hit of unemployed youth, will make the human capital of absolute and relative dissipation, as the unemployment time becomes longer, the greater the depreciation will be. These theories have a certain role for the long-term unemployed youth. Through this paper, in the promotion of unemployed youth employment problem of our country, I think, we need many measures, according to the above reasons, put forward some immature suggestions.

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CLC: > Economic > Economic planning and management > Labor Economics > Labor force > Employment and unemployment
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