Loss of productive capacity:
Unemployment wastes scarce resources used in training workers.
Furthermore, when unemployment becomes long-term, workers may face erosion of skills, reducing their chances of gaining employment in the future, affecting both short-term actual growth, and the potential growth, due to the declining quality, and productivity of the workforce. This is illustrated by an inward shit of the PPC, or a leftwards shift of the LRAS. Prolonged unemployment also causes workers to exit the labour force permanently, resulting in a further decrease in the productive capacity of the economy,