What is the economic impact of unemployment?

How much impact do measures to encourage people on welfare to go into work, have on structural unemployment?

• Theoretically, if successful on a large scale, they should initially marginally depress wages and/or conditions, making it more attractive to employers to hire people. (Of course, they can't push down wages for jobs that are already minimum wage, and unions may be able to successfully resist cuts in wages and/or conditions in some sectors, at least to some extent.) How much impact do they really have?

• Answer:

  When people on welfare go into work four major economic activities are triggered 1. Transfer payments reduce, hence government spending reduces 2. Investments by private sector goes up 3. Government earns taxes on wages earned by workers 4. The new money in the form of wages can then make its way into the economy by way of consumer spending Hence overall the GDP should rise as a result of increased aggregate demand and supply and budget deficit should reduce which then means a reduction in sovereign debt.