Study Finds That Unemployment Benefits Don’t Discourage Work

It’s a persistent canard, particularly in the U.S., to claim that unemployment benefits exacerbate joblessness by creating a disincentive to work — e.g. people will feel less inclined to find a job because they’re getting by just fine on government dole).

But a new multinational study conducted by sociologist Jan Eichhorn of the University of Edinburgh found that even generous unemployment assistance has little to no impact on people’s drive to find work (the report was published in the October issue of Social Indicators Researchwhich has a paywall). 

Eichhorn used data from the 15 core members of the European Union and Norway; notably, most of these countries offer their citizens far more substantial benefits than jobless Americans receive. Although he found that the well-being of the unemployed varied from country to country, ultimately the generosity of unemployment benefits had no impact on job-seeking, as determined by European Values Study, a large-scale database of public opinion that tracks various social and ideological trends of Europeans.

Eichhorn wrote:

This means that claims about unemployment benefits resulting in complacent unemployed people who chose the situation and would be satisfied with it cannot be retained uncritically.

His finding is consistent with 2011 study conducted by the Joint Economic Committee of Congress, which found that among the long-term unemployed, those eligible for benefits spent significantly more time looking for jobs than those who didn’t qualify. In other words, contrary to conventional wisdom, you’re more likely to go looking for work if you receive benefits than if you don’t: three times more likely, according to the committee. 

As Alex Seitz-Wald of Think Progress observed:

Federal unemployment insurance requires recipients to actively look for new work, and also gives them more flexibility to do. Someone with no job and no UI benefits will likely have to focus first on paying bills on a day-to-day basis before finding a job for the long-term.

To top it all off, unemployment benefits also offer a nice return on investment, despite the other persistent misconception that they’re a drain on public revenue. Aside from the ethical benefits of keeping millions of people from falling into deeper poverty, such benefits lessen the economic impact of widespread, long-term unemployment by giving people disposable income with which to drive demand (consumption is considerable fuel for our economy).

In fact, the Congressional Budget Office estimates that extending unemployment benefits for the long-term unemployed past the new year would increase growth and add 200,000 jobs to the economy in 2014. With job growth still painfully sclerotic, and consisting mostly of low-wage and unstable work, it makes both practical and moral sense to support the millions of people who are constrained by external factors from finding decent work.

Of course, unemployment assistance on its own is no way to support or fix the economy, but it would be a good mitigating factor. That’s a different discussion for another day.

Hat tip to Bill Moyers for originally reporting on this study.

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