One especially dim poster here has a statement I made to this effect as a sig line, with the crazy emoticon. I guess she will need to include 4 economists and their new study of unemployment benefits in her sig line, because they come to the same conclusion.
Unemployment benefits cause more unemployment, not less. Interestingly the major reason (there are several) is because the benefits put a floor on wages, a floor that is generally higher than employers are willing to pay. So there are fewer jobs created.
Review & Outlook: The Wages of Unemployment - WSJ.com
Unemployment benefits cause more unemployment, not less. Interestingly the major reason (there are several) is because the benefits put a floor on wages, a floor that is generally higher than employers are willing to pay. So there are fewer jobs created.
Review & Outlook: The Wages of Unemployment - WSJ.com
more at the source.No more sacred idea exists in American public policy than unemployment benefits. Unemployment insurance is thought of as an act of compassion and a necessary stimulative intervention to avoid a vicious cycle in which joblessness begets more joblessness. Not surprisingly, the Great Recession caused states to dramatically increase unemployment insurance up to 99 weeksfrom the more traditional 26.
A striking new study from the National Bureau of Economic Research concludes this is a mistake. Longer-term unemployment insurance, rather than supporting a recovery, likely makes unemployment persist.
"Most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility," conclude the authors of "Unemployment Benefits and Unemployment in the Great Recession." What's the problem?
The four economist-authors adopted an ingenious approach: Given how widespread long-term unemployment insurance programs have become in the U.S., they were able to compare results in counties that adjoin but that sit in separate states.
Because these common geographical regions share weather, housing markets, industry and culture, the economists were able to isolate the effects of differences in the duration of unemployment insurance, with normal adjustments for variations in such things as foreclosure policies.
Places with more unemployment generosity remained worse off than those with less. Unemployment, the economists write, "rises dramatically in the border counties belonging to the states that expanded unemployment benefit duration" compared to the counties next door. The benefit extensions can explain "most of the persistently high unemployment after the Great Recession."