Do Extended Unemployment Benefits Increase Unemployment?

h/t Kim Doyle Wille

According to a report prepared by Goldman Sachs, no.

Some commentators have argued that extended unemployment insurance (UI) benefits are the key reason for high unemployment in the United States. Using data from 20 OECD countries we present evidence to the contrary. Our results suggest that only ½ percentage point of the current 9.4% jobless rate can be explained by the extension of UI benefits. Moreover, our calculations suggest that this effect will fade when the extended benefits eventually expire. These estimates—broadly in line with a recent study by the San Francisco Fed—reinforce our view that the overwhelming share of unemployment is cyclical rather than structural.

The full story was published on The Awl.


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