Against Prolonged Unemployment Benefit Supplements

Ryan BourneHouse Democrats ’proposed $1.9 trillion stimulus bill includes a weekly pandemic unemployment benefit supplement of $400 per week through August 29. The generosity and duration of that uplift is a mistake —it will restrain an employment recovery through 2021 by disincentivizing returns to work.Democrats cite recent studies which suggest that the $600 supplement introduced at the height of lockdowns in 2020 did not much harm job findings.The level of benefits then was truly massive: the median unemployed recipient obtained 145 percent of their previous wage income from unemployment insurance, with a full 76 percent of those eligible making more unemployed than in their previous job. So, they say, if that benefit didn ’t appear to have a big effect on job take-up, why not a $400 supplement through August this year?But as I write in my forthcoming book,Economics In One Virus, good economists both “think on the margin” and about the context in which policies are implemented. That temporary $600 per week supplements did not appear to greatly impact job take-up when workers were being recalled by existing employers, the economy was deeply depressed, and a great deal of uncertainty existed o ver the future of the benefits, does not mean $400 per week supplements will do no harm today, when a greater share of the jobless are long-term unemployed and vaccines offer promise of a rapid economic reopening through spring.A new paper by University of Chicago-JP Morgan ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs