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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  • Sue Em

    So true! I am helping someone in Florida who lost his job to get UI benefits. What a run around. Without a computer you can’t apply any longer. If you go to a library you better be computer literate or you get kicked off the computer when your time is up. You have to type in every week at least 5 jobs you applied for – including address and phone number (so online applications don’t count if they don’t list a phone number). The new website isn’t running correctly and many have problems if they only have a chromebook or tablets. If you have a question you spend hours on the phone before you get through (which will require a land line unless you have unlimited minutes on your cell). After six weeks with still no benefits I contacted my senator and they got in touch with them. That (hopefully) got results. He should now (probably) get his benefits next week.
    People also forget it takes gas money to drive to places to fill out applications (if you can afford a car). Cable to apply for jobs. Printing paper and cartridge to print resumes. Windows or adobe programs to even format your resume…..and so on.
    America has gotten cruel.

  • Dario Pozzoli

    I m a labor economist at the University of Aarhus, Denmark. I largely agree with the main results of Eichhorn’s study but I think that it should be spelled out more clearly that generous unemployment benefits don’t discourage unemployed from finding a new job only if
    there is a good monitoring and system of sanctíons combined with the right active labor market policies (individual training, education and subsidized employment). Put it differently, it is important to have some activation programmes in which participation is a pre-condition for remaining eligible for unemployment benefits or social assistance.

  • Andrea

    Unemployment benefits made it impossible for me to find work. You have to look for work only in the area where you became unemployed or they cut you off. You cannot contact past employers unless they are in your current area, or they cutting you off… The rules of where you can search and who you can apply to make it difficult. It’s stupid how they cripple people from finding work. I followed their rules and was unemployed for a year, I stopped following their rules, got cut off but found 3 great jobs within 4 days. Never again.

  • Anonymous

    Well – you said “in Florida.” That explains a lot right there.

  • Nancy Gower-Anderson

    Andrea, what State are you in?

  • Leo

    Why aren’t you a Lego. :(((

  • Anonymous

    “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,”

    What an unbelievably long-winded way to say that the findings do not support the claim.

  • Anonymous

    People do work to make money they need for living, but this is not the only reason they want to work. Work can and should be fulfilling; nothing leads to a mood of depression faster than forced idleness, particularly through unemployment.

    Like so many others, my career ended involuntarily and spent several years looking for other work; I hated being idle almost as much as I hated losing my income and health insurance. Like it or not, I finally faced the fact that I had retired. But gradually I’ve found other ways to keep busy and discovered that this is the way to really enjoy retirement.

  • Anonymous

    Not every place has public transportation, or work force services. Even if you do, how are you going to pay for it with no income? I live in the Pacific NW. Most towns around here do NOT have public transportation, jobs are few and far between. If you have to go to a larger city to get a job, how are you supposed to get there and live there with no income coming in? Most people here in the small rural towns are stuck relying on family and friends for food and a place to stay if they happen to be that fortunate. I know a guy who is living in the next town up from me who is living in a tent and has been doing so for the last few years since he lost his job. The local paper only had an opening for a college faculty member, a p/t teacher and an engineer, none of which this guy nor the many like him in the area qualify for. There is just nothing here to apply for when your just an average joe.. .

  • apeele

    I have never, ever heard of these types of restrictions. Unemployment offices do not have software sophisticated enough to track where someone is working. I mean it makes no sense whatsover.

  • Anonymous

    When your new employer sees how you comprehend basic rules you will more than likely be looking for work again.

  • sam

    LOL, who did that study one of those that aren’t looking for a job, i know for a fact its bull.