Unemployment Myths

So, I had the misfortune of attending a Rotary meeting today and hearing a speaker from the Arkansas State Chamber of Commerce talk about the wonders they perform for the business community.  I mean, the misfortune was having to hear the talk, not attending the Rotary meeting.  Rotary meetings are usually nice.

I will leave the speaker nameless, since I really don’t want to start another kerfuffle here, but the reason I feel unfortunate for having been to the meeting is that I ended up listening to about thirty minutes of reporting on the Arkansas State Chamber of Commerce’s accomplishments.  What it ended up being was thirty minutes of what I call “authority voice”* and a disturbing lack of concern for the consequences of state legislation on any person who’s not a business.

The point where I finally had to walk out was when the presenter casually accused the unemployed of being willingly unemployed because of the extension of government benefits.  As someone who was unemployed for a long period of time, and worked with other long-term unemployed persons, I was incensed that someone would so simply and ignorantly slander a class of people who are at their weakest and most vulnerable.  It’s the old chestnut: people won’t look for a job so long as they get benefits.  The question is, is this true?

Happily, some research has been done on the subject.  Take a moment to look at this research paper: “Unemployment Insurance and Job Search in the Great Recession” by Jesse Rothstein.  It shows that extending unemployment benefits had a very small effect of continuing unemployment and increased unemployment by only 0.2-0.6%.  But, here’s the thing: according to the paper, half or more of this effect is due to reduced labor force exit.  That means that the unemployment extension helped the unemployed keep up hope, and keep trying for a job.  The author says that some analyses suggest that the extensions may have increased the share of the unemployed that were later employed.

So, it would seem that is that.  Myth: busted.

* Here’s a video summary of how the excellent authoritative delivery of utter nonsense can fool even the experts:

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