Unemployment has tremendous social and economic costs (see, e.g., Piachaud,
1997). Unemployment causes permanent losses of output of goods and services. The
unemployed are faced with financial insecurity, resulting in poverty and indebtedness.
Certain kinds of criminal activity are directly related to unemployment. Many studies
have linked unemployment to family disruption, suicide, ill health (physical and mental),
drug addiction, homelessness, malnutrition, poor prenatal care, school dropouts, racial
and ethnic antagonism, and other social problems (see, e.g., Jahoda, 1982).
Unemployment also differentially affects certain sectors of the population, so that
disadvantaged minorities, those with little education, and youth, e.g., can suffer from
rates of unemployment two to ten times the overall rate.