The Broader Market

by Heather Boushey, Jordan Eizenga and Matt Separa

A new paper by Jesse Rothstein, a professor of public policy and economics from the University of California Berkeley and former chief economist at the Department of Labor, throws cold water on the notion — touted by many conservatives — that extending unemployment insurance benefits provides a strong disincentive for the unemployed to look for work and thus, is a major reason for our persistently high unemployment rate.

Using data from the Department of Labor’s Current Population Survey, Rothstein demonstrates that extensions of unemployment benefits have actually had a very small effect on the unemployment rate during the Great Recession. He estimates that extended unemployment benefits have raised the unemployment rate by between 0.2 and 0.6 percentage points. And about half or more of that increase is attributable to individuals who remained in the labor force and searching for a job because unemployment benefits allowed them to continue to do so.

For more of the article, see here.