PoliticalChic
Diamond Member
1. Is big government a help, or a hindrance in running the economy?
Are the technocrats, the bureaucrats, the academic elites really capable of directing and correctly influencing the economy?
2. Hold the debates about minimum wage laws, the huge economic stimulus, student loan programs
and unending welfare policies....boondoggles all, .......but what about something as simple as unemployment compensation, and the nonstop extensions thereof?
a. The answer is, just as with the other feel-good Liberal fables, it does very much the opposite of what it intends.
Unemployment compensation policy causes, and extends, unemployment rates.
3. "Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers’ willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below).
Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion.
In this post, we argue that the expiration of the Emergency Unemployment Compensation (EUC) program may have contributed to this rapid rise in 2014.
4. How can the end of such an important fiscal stimulus, which at face value could be a drag on consumption, help the labor market and boost job openings?
After all, one rationale for this program was to provide stimulus to a fragile economy. The mechanism that we offer as an explanation is based on firms’ response to UI and is not new.
5. In fact, the Diamond-Mortensen-Pissarides model (Pissarides 2000, Mortensen and Pissarides 1994, andDiamond 1982), for which the Nobel Prize in Economics was awarded in 2010, predicts that increases in UI (unemployment insurance) generosity put upward pressure on wages since it becomes more expensive to lure people into work. As a consequence, firms anticipate lower profits and cut back job creation, which lowers the job finding rate and increases the unemployment rate. "
Liberty Street Economics
So.....by padding the lay-off's nest, the government is telling the unemployee to demand higher pay, or he won't come back to work.
As it restricts profits, firms cannot do so, and therefore, offer fewer jobs.
Liberal Economics: Fable and Failure
Are the technocrats, the bureaucrats, the academic elites really capable of directing and correctly influencing the economy?
2. Hold the debates about minimum wage laws, the huge economic stimulus, student loan programs
and unending welfare policies....boondoggles all, .......but what about something as simple as unemployment compensation, and the nonstop extensions thereof?
a. The answer is, just as with the other feel-good Liberal fables, it does very much the opposite of what it intends.
Unemployment compensation policy causes, and extends, unemployment rates.
3. "Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers’ willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below).
Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion.
In this post, we argue that the expiration of the Emergency Unemployment Compensation (EUC) program may have contributed to this rapid rise in 2014.
4. How can the end of such an important fiscal stimulus, which at face value could be a drag on consumption, help the labor market and boost job openings?
After all, one rationale for this program was to provide stimulus to a fragile economy. The mechanism that we offer as an explanation is based on firms’ response to UI and is not new.
5. In fact, the Diamond-Mortensen-Pissarides model (Pissarides 2000, Mortensen and Pissarides 1994, andDiamond 1982), for which the Nobel Prize in Economics was awarded in 2010, predicts that increases in UI (unemployment insurance) generosity put upward pressure on wages since it becomes more expensive to lure people into work. As a consequence, firms anticipate lower profits and cut back job creation, which lowers the job finding rate and increases the unemployment rate. "
Liberty Street Economics
So.....by padding the lay-off's nest, the government is telling the unemployee to demand higher pay, or he won't come back to work.
As it restricts profits, firms cannot do so, and therefore, offer fewer jobs.
Liberal Economics: Fable and Failure