Unemployment scarring

The papers taken together make it very clear that unemployment has a scarring effect for both future employment and future earnings. The costs of unemployment, particularly repeated unemployment, are much higher than the immediate loss earnings. This gives support to any policies which will secure its reduction, and also points up the need to include these future effects into any assessment of the costs of unemployment and equally into the evaluation of programmes to reduce it. Given the extent and magnitude of scarring, the main conclusion must be that prevention is better than cure. Well-managed transitions into work and between jobs will be the most effective approach. Estimates of the extent of scarring reveal just how high the costs of unemployment really are.