UI Benefits Help the Unemployed, Not the Employed

I have said pretty clearly that unemployment benefits are nice for the unemployed. I won’t argue with anyone who says just that.

The commentary out there goes wrong in three ways:

1. claims that unemployment benefits do little or nothing to raise unemployment (reduce employment). Those claims are not based on economics.

2. claims that unemployment benefits are good for people who are EMPLOYED. This is the “trickle down fraud” I referenced on Kudlow.

3. characterizes the incentives created by today’s fiscal policy as merely those of a “few hundred dollars a week of UI.” Today we are talking about tens of thousands of loan foregiveness, not to mention a host of other bad incentives. If UI, narrowly defined, were the only bad incentive, you wouldn’t be hearing from me on this issue.

Defenders of current fiscal policy have no reply based in economic analysis, so the best they can do is claim that I say something else (eg., that I claim that unemployment benefits are themselves a fraud).

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About Casey B. Mulligan 76 Articles

Affiliation: University of Chicago

Casey B. Mulligan is a Professor in the Department of Economics. Mulligan first joined the University of Chicago in 1991 as a graduate student, and received his Ph.D. in Economics from the University of Chicago in 1993.

He has also served as a Visiting Professor teaching public economics at Harvard University, Clemson University, and Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.

Mulligan is author of the 1997 book Parental Priorities and Economic Inequality, which studies economic models of, and statistical evidence on, the intergenerational transmission of economic status. His recent research is concerned with capital and labor taxation, with particular emphasis on tax incidence and positive theories of public policy. His recent work includes Market Responses to the Panic of 2008 (a book-in-process with Chicago graduate student Luke Threinen) and published articles such as “Selection, Investment, and Women’s Relative Wages,” “Deadweight Costs and the Size of Government,” “Do Democracies have Different Public Policies than Nondemocracies?,” “The Extent of the Market and the Supply of Regulation,” “What do Aggregate Consumption Euler Equations Say about the Capital Income Tax Burden?,” and “Public Policies as Specification Errors.” Mulligan has reported on some of these results in the Chicago Tribune, the Chicago Sun-Times, the Wall Street Journal, and the New York Times.

He is affiliated with a number of professional organizations, including the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He is also the recipient of numerous awards and fellowships, including those from the National Science Foundation, the Alfred P. Sloan Foundation, the Smith- Richardson Foundation, and the John M. Olin Foundation.

Visit: Supply and Demand (in that order)

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