Study: Unemployment Benefits Don’t Discourage People from Finding Work

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A new study shows that even generous unemployment benefits have zero impact on people’s drive to go out and find a job.

The multinational study, conducted by Jan Eichhorn, a sociologist at the University of Edinburgh, and published in the October issue of Social Indicators Research ($$), discredits what many see as conventional wisdom. During a floor debate over extending benefits for the long-term unemployed, Senator Jon Kyl of Arizona put it directly: “Continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

Not so, Eichhorn reports. Although he found that the well-being of the unemployed varied dramatically from country to country according to various economic and demographic variables, the key finding was that the generosity of unemployment benefits had no effect at all on people’s drive to go out and try to find a job. “This means that claims about unemployment benefits resulting in complacent unemployed people who chose the situation and would be satisfied with it cannot be retained uncritically,” he wrote.

(Eichhorn used data from the European Values Study – a large-scale database of public opinion data tracking what Europeans believe about family life, work, religion and society – and paired it with economic data from the 15 core countries of the European Union and Norway. Most of the countries Eichhorn studied offer their citizens much more substantial benefits than Americans enjoy when they lose a job.)

The study is consistent with previous research. A 2011 study by Congress’ Joint Economic Committee found that among the long-term unemployed, those eligible for benefits spent significantly more time looking for jobs than those who didn’t qualify: “In fact, since Congress enacted federal unemployment benefits, time spent looking for a job has tripled among the long‐term unemployed who are out of work as a result of job loss.”

As Alex Seitz-Wald noted at the time, “this makes sense.”

Federal unemployment insurance requires recipients to actively look for new work, and also gives them more flexibility to do. Someone with no job and no UI benefits will likely have to focus first on paying bills on a day-to-day basis before finding a job for the long-term.

Unemployment benefits also provide some of the best bang-for-the-buck in terms of stimulus. The Congressional Budget Office estimates that a Democratic proposal to extend unemployment benefits for the long-term unemployed past the new year would increase growth and add 200,000 jobs to the economy in 2014.

But House Republicans are set to block the measure, according to the Associated Press. If they succeed, 1.3 million Americans will lose their benefits just a few days after Christmas, and close to two million more will follow in the first half of next year.

Joshua Holland is a senior digital producer for BillMoyers.com. He’s the author of The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs and Corporate America) (Wiley: 2010), and host of Politics and Reality Radio. Follow him on Twitter or drop him an email at hollandj [at] moyersmedia [dot] com.
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