The Strong Case for Lump-Sum Unemployment Benefits

by Reihan Salam

One reason lump-sum unemployment benefits are attractive is that they don’t punish workers for finding new jobs relatively quickly. Yet lump-sum payments also give workers the freedom to take a longer amount of time to find more remunerative or engaging work. Among other things, a lump-sum payment could facilitate relocation to a more promising labor market, or it could be used to make an investment in training, etc. (See Raj Chetty’s “Moral Hazard vs. Liquidity and Optimal Unemployment Insurance.”)

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.