Rob Valletta and Katherine Kuang. Federal Reserve Bank of San Francisco. April 19, 2010.
“Extended Unemployment and UI Benefits” dismantles one of the traditional arguments against lengthy periods of unemployment coverage.
Conservatives often fret over the affect that unemployment insurance will have on unemployment duration itself. The argument is that workers will remain on UI instead of attempting to find a new job. During the Great Recession, the Obama Administration and the Democratic Congress were committed to extending unemployment benefits, with little pressure required from outside forces (unprecedented in American politics). As a result, by late 2009 most unemployed Americans were eligible for 99 weeks of unemployment insurance (the usual limit is 26 weeks). In theory, this unusually elongated extension could have contributed significantly to the unemployment rate. However, this study finds that without the extended UI period unemployment would have only been 0.4 percentage points lower at the end of 2009.
