The Corner

Capital Matters

Study: Boosting Unemployment Reduces Job Applications

A while back, I noted some research on last year’s $600 weekly boost to unemployment benefits. Those benefits, despite paying most workers more than they’d made while employed, didn’t seem to reduce employment much. I cautioned that these results didn’t imply we should keep paying a big boost as the economy recovers, but Congress extended a $300 boost through early September anyway.

An elaborate new study provides some more information, leveraging data from the job-search website Glassdoor. Last year’s boost does seem to have reduced applications from the categories of workers who saw the largest increases: “a 10% increase in the benefit replacement rate . . . leads to a 3.6% decline in job applications.” However, this effect came at a time when job vacancies were down 26 percent — and applications still managed to rise 4 percent overall thanks to the sheer number of workers who were unemployed. So it’s not surprising the effect on overall employment was incredibly muted.

With these results in hand, I’m even more worried that the new boost was not the right policy. But it’s too late to change it, and soon enough, there should be solid research on how this latest effort pans out.


The Latest