I mentioned economist Richard Barro’s work a month ago in the context of the ludicrous claim that a $1 of unemployment insurance spurs $1.63 of economic activity.
Barro is back today with another op-ed in The Wall Street Journal on the tricky subject of unemployment insurance.
Here’s the key number:
To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred and—I assume—the share of long-term unemployment had equaled the peak value of 24.5% observed in July 1983. Then, if the number of unemployed 26 weeks or less in June 2010 had still equaled the observed value of 7.9 million, the total number of unemployed would have been 10.4 million rather than 14.6 million. If the labor force still equaled the observed value (153.7 million), the unemployment rate would have been 6.8% rather than 9.5%.
Barro makes a point that is all too obviously true: the extension of unemployment benefits has increased the duration of people being unemployed.
Personally, after I was laid off by the Union-Tribune last year, I was not in too big of a rush to land another job because of unemployment insurance. The right job came along rather quickly, but because of the floor that unemployment insurance gave me, there were certain low-paying jobs that I would not consider because the government was giving me more money to look for a job rather than actually do a job.
I’ve said before that there’s a place for unemployment insurance, but two years is far too long.