New research shows unemployment benefits don’t keep people from finding jobs

A new working paper by economists Henry S. Farber and Robert G. Valletta finds that during a recession, extra weeks of unemployment benefits don’t keep people from finding jobs, they keep them afloat while they search for a job.

In the paper, Farber and Valletta exploit the variation in the timing and size of extensions to unemployment insurance across states to estimate what effects the extra weeks of benefits have on the chances that an individual finds a job, leaves the labor force, or stays unemployed. They find that the extra weeks of unemployment benefits decrease the likelihood than an individual stops being unemployed because more people stay in the labor force. Essentially, with added weeks of benefits during the recession, people kept searching for work rather than giving up.

We can add this to the growing pile of solid empirical research demonstrating that unemployment benefits are not the cause of today’s still-exceptionally high unemployment, help workers cope with the income loss from not having a job, reduce poverty among the unemployed, and boost the macroeconomy.

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