Tuesday, August 12, 2014

Does Ending Unemployment Benefits Increase Employment?

Congress decided not to extend unemployment benefits beyond the 26 week period in which the unemployed would receive benefits.  The decision was based upon the assumption that more of the unemployed would seek work when their benefits were terminated.  A liberal think tank and a conservative think tank did some research on this question and they reached the same conclusion.  Employment did not increase as a result of the policy decision by Congress.  One of the explanations for that result is that the unemployed must continue to look for work in order to receive benefits.  When the benefits were terminated many of the unemployed became discouraged and dropped out of the labor force.

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