Wednesday, July 23, 2014

Extended benefits and longer unemployment

When extended unemployment benefits are in place people stay unemployed longer. Does the benefit cause people not to work? To delay accepting a job? Federal Reserve Bank researchers say “yes."

Federal Reserve of St. Louis - the report

In summary, we find that the extension of unemployment benefits affected the labor market status of long-term unemployed workers in late 2013. Without extended UI benefits, these unemployed workers would have been more likely to be employed, more likely to exit the labor force, and on average 1.9 percent less likely to remain unemployed in the following period. In short, our simulated early termination of the EUC program lowered the unemployment rate by 3 to 5 basis points, suggesting that the December 2013 expiration of the EUC program might have slightly lowered the unemployment rate in early 2014.'

Via Townhall

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