The Relationship Between Alcohol And Unemployment

2820 Words12 Pages
Title: Counter or pro-cyclical? Alcohol consumption and unemployment in the United Kingdom 1929 -1939.
The relationship between alcohol consumption and unemployment is of great significance both economically and socially. Unemployment can prove costly in the short term through forgone wages but has also been shown to have long term implications. For example, five years after permanent layoffs, displaced workers earn ten to thirteen percent less than if the employment termination had been avoided. Furthermore, the unemployed are said to abuse alcohol as means of coping with financial stress and therefore may be at risk of alcohol abuse . Alcohol abuse and alcohol dependence negatively impact society through numerous channels but arguably most significant is the financial cost they place on the economy as a whole. It is estimated that the aggregate cost of alcohol abuse during 1998 in the United States was $184.6 billion, amounting to approximately 2% of GDP with lost labour earnings being the largest component .
A better understanding of the relationship between unemployment and alcohol consumption could have major economic policy implications. If unemployment leads to increased alcohol use, macroeconomic policy decisions intended to alleviate unemployment should also consider the positive externalities accrued to society through a reduction in alcohol consumption. This study sets out to establish the nature of the association between unemployment and alcohol consumed and
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