Chicago Fed estimates that unemployment insurance increased unemployment during the recession

A copy of the study is available here.

In­ summary, ­the­ base ­case ­and ­alternative­ estimates­ using­ the­ approach­ outlined­ in­ this ­article suggest­ that ­the ­extension­ of ­unemployment ­insurance ­benefits­ during ­the ­recent ­economic ­downturn­ can ­account ­for­ somewhere ­in ­the ­neighborhood­ of­ 1­ percentage­ point­ of­ the­ increase ­in ­the ­unemployment ­rate,­ with­ a ­preferred ­estimate ­of­ 0.8 ­percentage­ points. . . .

Another study from the Fed estimates how much of the decline in unemployment is due to people exhausting their unemployment benefits. That study is available here.

We use real-time microdata from the Bureau of Labor Statistics’ Current Population Survey (CPS) to examine whether there has been a reverse effect recently as benefits have been exhausted. We find that if UI benefits had lasted indefinitely, the unemployment rate would have been cumulatively about 0.1 to 0.3 percentage points higher between October 2009 and January 2011, which represents about 10% to 25% of the decline in the actual rate over that period. . . .

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Blogger Chas said...

Keynes was a con artist. His appeal to tax and spend politicians was that he preached that taxing and spending were the virtuous salvation of the nation. Taking tax dollars from people who need them, and then filtering the money through massive bureaucracies that consume much of the money before spending whatever is left, is a grossly inefficient way to spend money. People should spend their own money to stimulate the economy. For Keynes to rationalize the taking of people's money, and his patting politicians on the back for spending it, explains the popularity of Keynes with the political left. However, the American people would be vastly better off spending their own money, instead of having to endure the the ridiculous inefficiency of being forced to surrender their hard earned money to pay bureaucrats to spend it for them.
I am perfectly capable of spending my own money, thank you, Mr. Keynes, and I can do a better job of it than any politician or bureaucrat.

8/26/2011 1:34 PM  
Blogger Majid Ali said...

Please read my humble appeal on my profile

8/27/2011 1:13 AM  

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