“Would Extending Unemployment Benefits Increase Unemployment?” (LINK)

Link: “Would Extending Unemployment Benefits Increase Unemployment?

Simon van Zuylen-Wood (sweet name!) doesn’t think so, even though he acknowledges an economist that asserts unemployment might push up slightly with extended UI benefits. But perhaps that’s focusing on the wrong question. I want to know if the growth benefits outweigh the possible (less than 0.5%) employment costs of UI extension:

And then there’s the question of how UI stimulates the economy.  As the November CBO report estimated, extending unemployment benefits would result in 0.4 to 1.5 dollars of GDP growth in 2012 for every dollar it costs the government. Providing employees with payroll tax relief, by contrast, would grow the economy 0.1 to 0.6 dollars per dollar spent. Ezra Klein, via Howard Gleckman of the Tax Policy Center, explains one reason this might be the case: payroll tax relief boosts saving, while unemployment insurance is more likely to boost spending. Whatever the explanation: More growth means more jobs.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s