Yes. There is little doubt in my mind that teasing affects the individuals involved, those who witness the bullying, the bullies themselves, and everyone else. Bullying most certainly affects the overall climate of the school.
There is a great deal of research to show that victims of bullying are more likely to have difficulty with physical symptoms (e.g., more days missed of school due to stomach issues, etc) and emotional distress (e.g., depression and anxiety). In addition, victims are more likely to runaway from home and have problems with drugs and alcohol.
Bullies tend to grow into adult bullies and have ongoing problems with criminality later in life. Students who witness bullying are also affected because they quickly learn that bullying is present at the school and is allowed.
Finally, the school "climate" also affects the well-being of students and teachers. If the climate allows for bullying and harassment, it can be very taxing on the well-being of all involved.
L. Compian, Ph.D.