An estimated 1.8 million jobs were created in 2014 in the US due to unemployment benefit cuts

[Trausti]

job creation: the process of providing new jobs

new: recently created or having started to exist recently

If a job goes away in 2007 and returns in 2009 it's going to be considered a new job in 2009.

While I am not working for the same employer I had back then I'm doing basically the same thing for pretty much the same people and very soon now in exactly the same location. Top management is different but it's a small outfit that has been growing into the vacuum left by the failure of my former employer and the partial recovery of the market. These are "new" jobs, though, even though a big-picture analysis shows that they are replacements of the old positions.

They're certainly "new" to the people hired to do them.

 

[Loren Pechtel]

Come on, Ksen: Get with the program! When you cut UE benefits you create desperation to get a job...any job eventually...just to keep eating and keep your kids eating. Cutting UE makes the perfect situation for someone looking to get a "job" done at the LOWEST POSSIBLE PRICE. You tie this to taking away the minimum wage and you have a perfect EMPLOYER'S ECONOMY. Listen to the wisdom of Ayn Rand and stop coddling the fucking slaves!

Yes and no, because the intensity of a job search would be a U function. For a period of time after getting let go people look for a job and then it slips and then it picks back up as the period of benefits runs out. So to find the exact tradeoffs what they would need to do is compare what the level of job paid compared to what the government was paying them.

I disagree. At least around here you have to list where you applied (or tried to--getting a no-openings response qualifies as trying), you can't just slack off.

You do see something of a U-shaped pattern, though:

When you first lose your job there is a backlog of help-wanted ads, you are going to have more prospects. If those fail you will only have the new offerings to look at, if you are looking for anything skilled your search will be limited by this if relocation isn't feasible (and despite what the conservatives think, it often isn't. It very likely means giving up one's partner's income to get the new job, often a bad trade) the "intensity" drops because there simply isn't that much to do. Every day you go through the help-wanteds for your field, apply for anything reasonable and there's nothing more to do.

As unemployment is running out you'll look for anything to keep food on the table even if it's nothing like what you're trained for, hence the curve goes back up.

 

[Loren Pechtel]

There's trivial and there's outright stupid.

Arguing a job is created when someone decides they want to hire someone to do something at some price is outright stupid.

BTW, I just decided I want to hire everyone in China to cut my lawn for $0.000001.

Bam, that created like a billion jobs. Take that Obama.

Until you can explain how the concept and measurement of "job vacancy" fits your position, your argument is literally counterfactual.

Nothing about "job vacancy" says it must be reasonable. In the depths of the collapse I saw ads offering as low as 1/4 of what a position should go for.

There was also a conservative who objected to my characterization of the local job market in my field--I went through the current ads here to get some actual numbers. From looking it over I could see that over 80% of the "positions" were either dupes (it was common to see three or four recruiters post positions with identical requirements), recruiters fishing for resumes (the same non-specific ad that had been running for the last 6 months) or companies where there was something wrong as the position never got filled. (One case I know something of why as we went through several rounds of e-mail. I saw no reason to believe success was possible and while I would try I would not accept equity in lieu of salary because of this.)

 

[Loren Pechtel]

Within Reason, dismal. Always within reason.

Your position is equally stupid, in that it assumes that there is no such thing as a labor shortage. It is possible for a position to exist, offering REASONABLE wages, and not get filled.

Now, can we have a REASONABLE objection or a counter definition without resorting to childish make-believe?

Right. There is no such thing as a "labor shortage".

There is just people not being willing to pay enough to clear the market.

Labor shortages certainly do exist.

In the long run they are due to employers not being willing to pay enough but in the short run it's possible to have demand that exceeds supply, period.

I invent an antigravity engine that can lift stuff to orbit for $5/kg. (Assuming a feasible way to store the required energy and 100% efficiency in using that energy to reach orbit this is a reasonable price.) Unfortunately, the engine is quite complex and requires a good understanding of the theory in order to perform maintenance. Are you saying there wouldn't be a labor shortage of antigravity mechanics until enough got trained??

 

[dismal]

Right. There is no such thing as a "labor shortage".

There is just people not being willing to pay enough to clear the market.

Labor shortages certainly do exist.

In the long run they are due to employers not being willing to pay enough but in the short run it's possible to have demand that exceeds supply, period.

I invent an antigravity engine that can lift stuff to orbit for $5/kg. (Assuming a feasible way to store the required energy and 100% efficiency in using that energy to reach orbit this is a reasonable price.) Unfortunately, the engine is quite complex and requires a good understanding of the theory in order to perform maintenance. Are you saying there wouldn't be a labor shortage of antigravity mechanics until enough got trained??

There is no "labor shortage" without the introduction of some artificial constraint.

If the quantity of a type of labor demanded exceeds the supply at a given price, the price goes up until they are equal and the problem is not a problem.

 

[ksen]

hahaha, yeah, the wages go up.

 

[laughing dog]

Labor shortages certainly do exist.

In the long run they are due to employers not being willing to pay enough but in the short run it's possible to have demand that exceeds supply, period.

I invent an antigravity engine that can lift stuff to orbit for $5/kg. (Assuming a feasible way to store the required energy and 100% efficiency in using that energy to reach orbit this is a reasonable price.) Unfortunately, the engine is quite complex and requires a good understanding of the theory in order to perform maintenance. Are you saying there wouldn't be a labor shortage of antigravity mechanics until enough got trained??

There is no "labor shortage" without the introduction of some artificial constraint.

If the quantity of a type of labor demanded exceeds the supply at a given price, the price goes up until they are equal and the problem is not a problem.

Um, you just described a labor shortage until the market clears. Can you point to any actual studies or data that indicates that labor markets tend to adjust to equilibrium quickly?

 

[Canard DuJour]

In standard economic discourse, a job doesn't exist until someone is actually performing it. Prior to that it is merely a potential job. When a person quits or is fired, a job is lost and no longer exists. If the employer desires to replace that person, then there is a job opening, which is the void that exists when there is no actual job (no one performing it) but there is an employer willing to pay someone to perform it.

All those nitpicking over the phrase "job creation" are equating the concept of job opening or potential job with an actual job, which is the like as equating a mothers desire for a child with an actual child. Until there is a father who combines his genes to create an actual child, there is no child. Until there is a person who is actually performing the job desired by the employer there is no job. In everyday language were are fast and loose with our words, including "job". We say "Do you have a job?" to mean two completely different things: 1) are you employed; 2) can you employ me? This is why everyday definitions are typically useless for any rational scientific analysis of an issue, which require specific operationally defined (i.e., directly observable) definition of all concepts. The OP study used the definition of "job creation" that is standard in formal economic research, which is merely an increase in the number of people employed (whether they are employed in a job whose opening was listed for the last 5 years or just yesterday with the start of a brand new industry is irrelevant to that definition).

Critics of the OP are essentially arguing for a definition that is the number of new and previously non-available theoretical slots in which people are or could be employed if there enough people willing to perform the job. Using the latter definition, the only way to show that X "created jobs" would be to show that an person added to the employment roles is performing a job that no one wanted them to perform before but now do. That is not the definition in economics because it is nearly impossible to measure in any scientifically reliable and valid way.

The root of this nitpicking about "job creation" seems to be a sensible but still emotional reaction to the notion that many of these newly employed people are far worse off than they were, thus not wanting to confer upon the effects the positivity that we subjectivity and non-scientifically impose upon the notion of "job creation". These former unemployed folks are taking jobs they could have taken before but didn't because they are jobs that cannot meet basic needs and are only better than an income of zero with no public assistance. This is clearly true. The study authors should have taken a measure of the income from jobs at each time point, and they would have shown that after adjusting for economic growth not tied to the policy change, the avg income declined as the number of jobs increased due mostly to an increase in the number of jobs at the lowest end. This would support the claim that the added jobs were very low pay.
This is a valid point about the limits of the study, quibbling over the phrase "jobs created" is not.

Well that's useful to know. When people hear right-wingers and their economist shills making positive noises about "job creators", we assume they're on about new livelihood opportunities. Turns out they just as likely mean forcing people into existing dead-end jobs the rest of us subsidise with welfare. So we can ignore them. Thanks for the disambiguation.

 

[ksen]

http://www.nextnewdeal.net/rortybom...ance-extensions-really-create-18-million-jobs

 

[Loren Pechtel]

Labor shortages certainly do exist.

In the long run they are due to employers not being willing to pay enough but in the short run it's possible to have demand that exceeds supply, period.

I invent an antigravity engine that can lift stuff to orbit for $5/kg. (Assuming a feasible way to store the required energy and 100% efficiency in using that energy to reach orbit this is a reasonable price.) Unfortunately, the engine is quite complex and requires a good understanding of the theory in order to perform maintenance. Are you saying there wouldn't be a labor shortage of antigravity mechanics until enough got trained??

There is no "labor shortage" without the introduction of some artificial constraint.

If the quantity of a type of labor demanded exceeds the supply at a given price, the price goes up until they are equal and the problem is not a problem.

You're missing the point. You can get actual labor shortages when the demand changes faster than new workers can be trained. The dot.com bubble is an example of this--web programmers were making a ton and demand still outstripped supply.

 

[Togo]

Yes and no, because the intensity of a job search would be a U function. For a period of time after getting let go people look for a job and then it slips and then it picks back up as the period of benefits runs out. So to find the exact tradeoffs what they would need to do is compare what the level of job paid compared to what the government was paying them.

I disagree. At least around here you have to list where you applied (or tried to--getting a no-openings response qualifies as trying), you can't just slack off.

You do see something of a U-shaped pattern, though:

When you first lose your job there is a backlog of help-wanted ads, you are going to have more prospects. If those fail you will only have the new offerings to look at, if you are looking for anything skilled your search will be limited by this if relocation isn't feasible (and despite what the conservatives think, it often isn't. It very likely means giving up one's partner's income to get the new job, often a bad trade) the "intensity" drops because there simply isn't that much to do. Every day you go through the help-wanteds for your field, apply for anything reasonable and there's nothing more to do.

As unemployment is running out you'll look for anything to keep food on the table even if it's nothing like what you're trained for, hence the curve goes back up.

According to this account, the 'increase' in jobs is acheived by lowering productivity. You have people down-skilling to gain less valuable jobs because otherwise they will starve.

In practice of course, most of the new jobs were gained by new entrants into the market, not by the existing unemployed. It's retirees and housespouses going to work to make ends meet, and children and students dropping out of education to earn some cash.

 

[dismal]

There is no "labor shortage" without the introduction of some artificial constraint.

If the quantity of a type of labor demanded exceeds the supply at a given price, the price goes up until they are equal and the problem is not a problem.

You're missing the point. You can get actual labor shortages when the demand changes faster than new workers can be trained. The dot.com bubble is an example of this--web programmers were making a ton and demand still outstripped supply.

Any scenario of this type you can imagine I can answer it by saying "No, there is no labor shortage. The price being offered is too low to clear the market." Demand is a function of price. Supply is a function of price. Supply may be inelastic in the short run, but demand for web programmers in a dot com bubble is not. I imagine if the price for them were set at, say, $1 million per day demand would be rather slight.

 

[Crazy Eddie]

The summary of the paper is inaccurate. There is nothing in their analysis that suggests that reduction in the duration of unemployment increases the number of available jobs. Their paper addresses employment of vacant jobs, not job creation.

Which is interesting, because while the ANALYSIS doesn't support that conclusion, it nevertheless remains one of their conclusions:

Another important finding in this paper concerns the effect of unemployment benefit duration
on labor force participation. Prior to the reform, the consensus in the profession seemed
to predict a negative impact of the cut in benefit durations on the size of the labor force.
Instead, we found that the reform led to almost a million non-participants entering the labor
market. It seems plausible that they were encouraged by the improved probability of finding
jobs due to the positive effect of the reform on job creation

There analysis relies on a lot of circular reasoning here. On the one hand, they're using data from the Bureau of Labor Statistics to calculate the rate of employment in individual states and seeing that 1.8 million people stopped collecting unemployment benefits, of which they (somehow) estimate that 1 million was due PURELY to their benefits being cut. On the other hand, the Bureau measures the unemployment rate based on the number of people currently receiving unemployment benefits.
Basically: they're no longer on unemployment, therefore they must have found jobs.
The reason they found jobs is because they're no longer on unemployment.

 

[maxparrish]

In standard economic discourse, a job doesn't exist until someone is actually performing it. Prior to that it is merely a potential job. When a person quits or is fired, a job is lost and no longer exists. If the employer desires to replace that person, then there is a job opening, which is the void that exists when there is no actual job (no one performing it) but there is an employer willing to pay someone to perform it.

...The OP study used the definition of "job creation" that is standard in formal economic research, which is merely an increase in the number of people employed (whether they are employed in a job whose opening was listed for the last 5 years or just yesterday with the start of a brand new industry is irrelevant to that definition).

Critics of the OP are essentially arguing for a definition that is the number of new and previously non-available theoretical slots in which people are or could be employed if there enough people willing to perform the job. Using the latter definition, the only way to show that X "created jobs" would be to show that an person added to the employment roles is performing a job that no one wanted them to perform before but now do. That is not the definition in economics because it is nearly impossible to measure in any scientifically reliable and valid way.

The root of this nitpicking about "job creation" seems to be a sensible but still emotional reaction to the notion that many of these newly employed people are far worse off than they were, thus not wanting to confer upon the effects the positivist that we subjectivity and non-scientifically impose upon the notion of "job creation". ...This is a valid point about the limits of the study, quibbling over the phrase "jobs created" is not.

Actually the root of the nitpicking is due to a few of our posters whose first response is to sneer over a term, impugn the authors of the paper, and then to create a thread war over the meaning of that term so as to redirect attention away from the merits of an argument or finding. That 10 pages later this thread is still focused on the meaning of "job creation", rather than the merits of the paper, confirms its success.

And, by the way, it seems you are very correct. A couple of other well know and respected prior researchers on unemployment (jointly winning the noble prize in economics) used the same definition in their influential paper:

http://individual.utoronto.ca/zheli/D12.pdf

Under notations and concepts it says: "Following the empirical literature, we say that job creation takes place when a firm with a vacant job and a worker meet and start producing; opening a new job vacancy is not job creation.."

In any event, one can easily "clarify" such needless derails by noting that abstract(s) convey what they found without getting into wars over "job creation".

We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized. http://c0.nrostatic.com/sites/default/files/w20884.pdf

I found a similar study, finding the same relationship.

We examine the relationship between unemployment benefits and unemployment using Swedish regional data. To estimate the effect of an increase in unemployment insurance (UI) on unemployment we exploit the ceiling on UI benefits. The benefit ceiling, coupled with the fact that there are regional wage differentials, implies that the generosity of UI varies regionally. More importantly, the actual generosity of UI varies within region over time due to variations in the benefit ceiling. We find fairly robust evidence suggesting that the actual generosity of UI does matter for regional unemployment. Increases in the actual replacement rate contribute to higher unemployment as suggested by theory. We also show that removing the wage cap in UI benefit receipt would reduce the dispersion of regional unemployment. This result is due to the fact that low unemployment regions tend to be high wage regions where the benefit ceiling has a greater bite. Removing the benefit ceiling thus implies that the actual generosity of UI increases more in low unemployment regions. http://ftp.iza.org/dp3570.pdf

 

[arkirk]

Which is interesting, because while the ANALYSIS doesn't support that conclusion, it nevertheless remains one of their conclusions:

Another important finding in this paper concerns the effect of unemployment benefit duration
on labor force participation. Prior to the reform, the consensus in the profession seemed
to predict a negative impact of the cut in benefit durations on the size of the labor force.
Instead, we found that the reform led to almost a million non-participants entering the labor
market. It seems plausible that they were encouraged by the improved probability of finding
jobs due to the positive effect of the reform on job creation

There analysis relies on a lot of circular reasoning here. On the one hand, they're using data from the Bureau of Labor Statistics to calculate the rate of employment in individual states and seeing that 1.8 million people stopped collecting unemployment benefits, of which they (somehow) estimate that 1 million was due PURELY to their benefits being cut. On the other hand, the Bureau measures the unemployment rate based on the number of people currently receiving unemployment benefits.
Basically: they're no longer on unemployment, therefore they must have found jobs.
The reason they found jobs is because they're no longer on unemployment.

There's an old adage that applies here: "Figures don't lie, but liars can figure." The problem with a lot of seeming statistical reports lies in the framing of the problem and the framing of conditions that would be considered the solution.

 

[laughing dog]

Actually the root of the nitpicking is due to a few of our posters whose first response is to sneer over a term, impugn the authors of the paper, and then to create a thread war over the meaning of that term so as to redirect attention away from the merits of an argument or finding. That 10 pages later this thread is still focused on the meaning of "job creation", rather than the merits of the paper, confirms its success.

And, by the way, it seems you are very correct. A couple of other well know and respected prior researchers on unemployment (jointly winning the noble prize in economics) used the same definition in their influential paper:

http://individual.utoronto.ca/zheli/D12.pdf

Under notations and concepts it says: "Following the empirical literature, we say that job creation takes place when a firm with a vacant job and a worker meet and start producing; opening a new job vacancy is not job creation.."

The Cheshire Cat showed a long time ago that words can mean whatever people want. However our quote shows you miss the entire point (see the bold faced and italicized phrase). Can explain how that vacant job existed before the the worker got hired? When a paper using arcane and specific esoteric jargon without clarification, it is open for misuse by non-specialists.

Few people in this thread that I can tell find the conclusion that reducing the duration of unemployment benefits induces the unemployed to find work.

I

 

[Trausti]

Economists at the New York Federal Reserve Bank seem to have reached a similar conclusion last year:

Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers’ willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below). Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion. In this post, we argue that the expiration of the Emergency Unemployment Compensation (EUC) program may have contributed to this rapid rise in 2014.

http://libertystreeteconomics.newyorkfed.org/2014/09/do-unemployment-benefits-expirations-help-explain-the-surge-in-job-openings.html#.VMlyF9LF-Ck

 

[laughing dog]

Economists at the New York Federal Reserve Bank seem to have reached a similar conclusion last year:

Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers’ willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below). Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion. In this post, we argue that the expiration of the Emergency Unemployment Compensation (EUC) program may have contributed to this rapid rise in 2014.

http://libertystreeteconomics.newyorkfed.org/2014/09/do-unemployment-benefits-expirations-help-explain-the-surge-in-job-openings.html#.VMlyF9LF-Ck

Now that paper presents a causal reason for the linkage: reductions in the duration of unemployment benefits reduces unemployment insurance payments/premiums which acts as a reduction in the labor costs of an employee, which should increase the quantity demanded of labor. It would be a more convincing argument if the research linked the job openings to specific industries or jobs, because some industries (like retail trade and services) have low to negligible UI.

 

[Loren Pechtel]

I disagree. At least around here you have to list where you applied (or tried to--getting a no-openings response qualifies as trying), you can't just slack off.

You do see something of a U-shaped pattern, though:

When you first lose your job there is a backlog of help-wanted ads, you are going to have more prospects. If those fail you will only have the new offerings to look at, if you are looking for anything skilled your search will be limited by this if relocation isn't feasible (and despite what the conservatives think, it often isn't. It very likely means giving up one's partner's income to get the new job, often a bad trade) the "intensity" drops because there simply isn't that much to do. Every day you go through the help-wanteds for your field, apply for anything reasonable and there's nothing more to do.

As unemployment is running out you'll look for anything to keep food on the table even if it's nothing like what you're trained for, hence the curve goes back up.

According to this account, the 'increase' in jobs is acheived by lowering productivity. You have people down-skilling to gain less valuable jobs because otherwise they will starve.

In practice of course, most of the new jobs were gained by new entrants into the market, not by the existing unemployed. It's retirees and housespouses going to work to make ends meet, and children and students dropping out of education to earn some cash.

I wasn't saying it was a good thing, just that there is a U curve without motivation being involved.

- - - Updated - - -

You're missing the point. You can get actual labor shortages when the demand changes faster than new workers can be trained. The dot.com bubble is an example of this--web programmers were making a ton and demand still outstripped supply.

Any scenario of this type you can imagine I can answer it by saying "No, there is no labor shortage. The price being offered is too low to clear the market." Demand is a function of price. Supply is a function of price. Supply may be inelastic in the short run, but demand for web programmers in a dot com bubble is not. I imagine if the price for them were set at, say, $1 million per day demand would be rather slight.

In a sense, yes--set the price high enough and many will choose to go without. I still see that as a labor shortage, though--if you can't get labor at anything like what used to be the market clearing price you have a shortage.

 

[SimpleDon]

We measure the effect of unemployment benefit duration on employment. We exploit the variation
induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit
extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to
47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve
identification we use the fact that this policy change was exogenous to cross-sectional differences
across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in
benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In
levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of
these jobs were filled by workers from out of the labor force who would not have participated in the
labor market had benefit extensions been reauthorized.

Full paper here:

http://c0.nrostatic.com/sites/default/files/w20884.pdf

I can't believe that I missed this thread! It must have fallen below the crease for me when I have checked the board.

I am assuming that you have read the paper. Can you explain to me what an "interactive effects estimator" is and how it is applied here? It is somewhat critical to understanding the paper and a search for it says that it is related to dynamic scoring, to inter-temporal models, a fancy way of saying that over time the policy changes behavior.

I haven't seen any other discussions of this paper than the National Review article that predictably took it as gospel not because they had veted the paper's methodology but because the abstract buttered their preconceived biases.

My first blush is that the paper is right on the basics. If you pay for something, unemployment in this case, you will get more of it. Of course, higher unemployment compensation will get you more unemployment over time.

But the purpose of unemployment compensation isn't to reduce unemployment, it is to reduce the impact of unemployment to the individual. Yes, it allows them to be pickier about the job that they take. Once again, this is not a flaw in unemployment insurance, it is one of the reasons for it. To prevent the unemployed worker from having to take a job just to get by, a job that doesn't utilize their full capabilities. Remember that one of the reasons that we have an economy is to fully utilize a scarce resource. If people have to take a job just to get by it starts a cascade of people who have to do the same. The job that I take that doesn't use my skills and training is someone else's job that does utilize their skills and training fully. Now he has to take an even lower skill required job forcing in turn, someone else to settle for an even lower job, and so on. The net result should be more people employed but an overall lower wage structure, exactly what happened in 2014, as the authors admitted. And exactly what unemployment compensation is designed to prevent.

Also another reason for unemployment compensation is that the money used for it is spent in the real economy, not in Wall Street's various zero sum gambling paper so-called investments where the QEs' money goes. It boosts the economy during recessions. It is one of the automatic compensators that help to stabilize the economy in a downturn.

What is questionable in my mind is the claim that the lack of this relatively small amount of money "created” 1.8 million jobs by itself. There is no inflection point in the build up of the number of jobs coming out of the recession. There is a massive inconstancy in some people's view about whether government spending can create jobs. In this case they are making the claim that the absence of government spending is creating jobs. It seems that when we talk about government defense spending suddenly the opposite is true, government spending does create jobs and the absence of government spending destroys jobs.

The methodology of the study is what is known as a regression discontinuity, cross border, research design. The discontinuity is the border of course. These are the same kind of studies as the ones confirming that increases in the minimum wage don't result in unemployment, only in a possible decrease in the rate of future increases in employment if the increase comes when there is full equilibrium employment or that increased taxes on the wealthy increase wages.

Always when you have such a study you have to answer a few questions. Were there any other factors that could have explained the improvement cross the borders between the more generous states and the less generous ones and are the windows that were looked at, counties, free from contamination by other discontinuity factors, the opening or closing of a major employer for example. These are not addressed in the preliminary paper. This is not to say that there is a problem, but they have to be addressed.

Also, I always cringe at the assumption used here that the impact on the macroeconomy is 310 million times the impact on a single individual. For most effects in the macroeconomy the reverse is true, the macroeconomy has to be a mirror not a copy of the microeconomy. It has to behave in the opposite direction to the micro effects. If the micro is not spending then the macro has to spend. If the micro is spending the macro has to save.

It is satisfying to have something that you feel, that higher unemployment compensation does result in more unemployment over time. But as I said, the purpose of unemployment compensation isn't to reduce the unemployment. What would be more satisfying is if they would now do a study of whether unemployment compensation fulfills its purposes that I outlined above.

Sorry about the misspellings and any bad grammar, I can't stay, I have to get ready for a dinner tonight. I will read the thread tonight and see how close I got to others answering this tread.