Unemployment and long-run growth
Unemployment may be associated with structural change and subsequent economic
growth. Here, we focus on the mechanisms through which high and persistent
unemployment may directly hinder economic growth. In the short run, economic growth and unemployment are inversely related along the business cycle. However,
structural unemployment mainly depends on factors related to the characteristics of
the labour market. Moreover, when unemployment becomes high and persistent there
are economic costs that can become detrimental to long-run growth. Unemployment
not only represents a high social cost for the individual, it also represents a high economic
cost for the society (Sanchis-i-Marco, 2011).