Unemployment Scarring Effect in Micro and Macroeconomics in Different Countries: Literature Review

Labor is a human resource that is important for the progress of a country and is necessary for economic growth. Understanding the relationship between labor and the scarring effect can help to minimize or reduce the occurrence of the scarring effect in the future. The potential effects of scarring effects on productivity and labor markets are analyzed in macro and microeconomics. The methodology used is a literature review that presents the scarring effect that occurs in several countries and improvement steps to reduce the scarring effect. Policy implications are identified by synthesizing previous research. The results showed that the scarring effect occurred varied across several countries. The scarring effect predicts that the current unemployment effect has the potential to last for the remainder of an individual's working life. The right policy will certainly be useful in dealing with the scarring effect of labor in the future. Knowing the scarring effect of labor in several countries will help determine policies that suit needs. Unemployment leaves young workers with scars. The failure of the youth labor market is actually costly even though most adolescents have a relatively short period of unemployment, economic shocks that cause the scarring effect of the labor market present important policy issues. These findings are important and urgent to build resilience to avoid the scarring effect for countries vulnerable to natural disasters. The implication of this literature review is that it can contribute to the workforce experiencing a scarring effect and prevent the occurrence of a scarring effect in the future. Regarding the direction of further research, this research can be continued by conducting research on other scarring effects besides the scarring effect of labor. This is done to find out the scarring effect other than labor. This research and subsequent research are important for policymakers to mitigate the potential long-term effects of the scarring effect in the future.