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Does Cutting Jobless Benefits Increase Employment?



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Back in December I wrote a brief argument here on the Corner as to why federal unemployment benefits should be extended beyond the standard twenty-six weeks. Rereading it, I think it holds up pretty well.

Many conservatives didn’t agree at the time, and still don’t. They argue that the jobs record in North Carolina — which cut the maximum duration of unemployment benefits earlier than other states did — suggests that the federal government was right not to extend benefits.

But what really happened in North Carolina? The economist Justin Wolfers has a great essay in the New York Times looking at exactly this.

Since North Carolina effectively eliminated unemployment benefits last year for people unemployed 20 weeks or more, the state has become a symbol in the partisan wars over economic policy. People on either side of those wars have argued that it proves the economic advantages — or damage — of providing the long-term jobless with cash payments.

But digging into the data suggests North Carolina should really be a case study in people seeing what they want to see.

You can read Wolfers’s entire essay here.

And on the general subject of the relationship between cutting jobless benefits and employment, my AEI colleague James Pethokoukis summarizes some recent research here.

Michael R. Strain is a resident scholar in economic policy studies at the American Enterprise Institute. You can write to him on Twitter at twitter.com/MichaelRStrain.



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