Tuesday, July 27, 2010

Extension of Unemployment Benefits

I recently read this article from the Economist that debates the recent congressional decision to extend unemployment benefits.  This decision comes down to weighing two factors:  
  1. protecting at least part of the earnings of workers who were laid off due to no fault of their own 
  2. ensuring that unemployment is not comfortable enough to encourage workers to intentionally get laid off or not attempt to find work when unemployed

I side with Professor Gary Becker who writes:
During bad times, 6 months of unemployment compensation may not be long enough, but the 2 years in the new law is too long.  About 9 months of unemployment compensation would be the right length. Anyone unemployed longer than that would lose these benefits. If they want to work they should be forced to adjust, at least temporarily, to the bad economic environment, and accept jobs that they would turn down during good economic times.

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