Study: Unemployment Benefits Have Negligible Effect On Jobless Rate

Not that this study will make much of an impact anyway, because we all know worry about job growth isn't the real reason the House majority won't extend unemployment benefits. They simply want people to be so desperate, they'll even vote for Republicans:

Generous unemployment benefits have had little effect on the unemployment rate, according to a new study that may help ease concerns that benefits give sidelined Americans a disincentive to hunt for jobs.

Yes, because not being able to pay your mortgage, buy food or put gas in the tank isn't quite disincentive enough. Sometimes I think these economists would get better results if they became voodoo doctors.

Unemployment insurance, which is available for up to 99 weeks in some states, nudged the jobless rate up 0.2 to 0.6 of a percentage point higher than it would have been otherwise, according to a new paper by Jesse Rothstein, a University of California, Berkeley economist and released at the Brookings Institution this week.

“Any negative effects of the recent unemployment insurance extensions on job search are clearly quite small, too small to outweigh the benefits of transfers to people who have been out of work for over a year in conditions where job-finding prospects are bleak,” according to the report.

Economists generally agree that extended jobless benefits increase the unemployment rate. But they disagree on how big the effect is and how damaging that is to the economy.

Generous unemployment insurance can increase joblessness if Americans who are out of work don’t search as hard as they otherwise would have for new jobs. They can also give recipients a reason to hold out for better-paying jobs. Those impacts can be a negative for the economy because it means instead of reentering the job market, sidelined workers are relying on the government for assistance and staying unemployed for longer.

Yes, because as any austerity cheerleader will tell you, it's very important that workers get used to the fact that they're now permanently competing for Third World wages.

The extended benefits can also push the unemployment rate up for less ominous reasons. Because jobless Americans have to be searching for work to receive benefits, the checks could give them an incentive to continuing hunting for a job when they otherwise would have given up and dropped out of the labor force. That bumps up measured unemployment, which counts only those who are jobless but looking for work, but it doesn’t increase the actual number of people out of work in the U.S.

Mr. Rothstein’s research found that at least half of the increase in the unemployment rate from extended benefits came from workers staying attached to the labor force as opposed to Americans not searching as hard for jobs or being pickier about the ones they would accept.


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