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

[maxparrish]

...A couple of other well know and respected prior researchers on unemployment (jointly winning the noble prize in economics) used the same definition (job creation) 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... 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.

Because the contextual meaning of the terms "vacant job" and "job vacancy" is synonymous to "vacant position" and "position vacancy". I doubt the term "job" confused any but it might have been better stated as a "vacant position" and "new position vacancy". Fortunately except for an occasional pedantic Cheshire Cat, the plain meaning to most is clear: when an existing or new job (position) is filled that constitutes job creation.

"Job creation takes place when a firm and a worker meet and agree to a an employment contract." (Pissarides (2000)). The net changes in employment are used to determine job gains and losses and net job creation (see BLS publications). By the way, this is not terribly "arcane" or "esoteric" meaning, it is the meaning used in the popular press and in competing partisan claims. When a politician claims that he/she "created" four million jobs that would otherwise not exist and quotes employment data they are not speaking about unfilled openings. The paper's authors and the op used the term "job creation" as commonly understood.

So, the finding of the working paper (Hagedorn, Mitman, and Manovskii) is that the ending of extended unemployment benefits at the end of 2013 explains a large portion of the labor-market boom in 2014. The "job creation" in 2014, meaning filled jobs (not unfilled or non-existent job offerings), amounted to (in their estimate) 1.8 million jobs in the labor force (about 60 percent of the 2014 gain).

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.

Few people in this thread would concede that the world is round if their politics were vested in the belief of a flat earth. However the unemployment economic literature, as well as economic theory, suggests that if you pay people not to work (unemployment) you will (to some degree) succeed. But there is also more than one way the disemployment effect of UI works, and there is a wide range of estimates as to how strong or weak that effect is.

Actually, the authors of the op paper (and the authors related one a year ago (https://www.dropbox.com/s/p6711tak9ly8r6e/UI_&_U.pdf?dl=0)) don't say cutting benefits alone induced folks back to work, but that the resulting lower wage cost to hire (wages no longer have to compete with unemployment benefits) induced employers to hire more workers. In the prior paper they argue that the extended benefits raised wage levels needed to recruit a worker, but when they expired in 2013 and employers no longer had to pay so much they increased job openings and hired more workers.

These two papers and the one Trausti linked to above at the NYFRB explain the dynamics of job creation. Were the effects of ending extended unemployment as strong as the authors claim? I remain an agnostic on that issue.

 

[fromderinside]

The Cheshire Cat showed a long time ago that words can mean whatever people want. However our quote shows you miss the entire point... 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.

Because the contextual meaning of the terms "vacant job" and "job vacancy" is synonymous to "vacant position" and "position vacancy". I doubt the term "job" confused any but the most tone deaf, but might have been better stated as a "vacant position" and "new position vacancy". Fortunately, except for the occasional pedantic Cheshire Cat, the plain meaning to most is clear: when an existing or new job (position) is filled that constitutes job creation.

"Job creation takes place when a firm and a worker meet and agree to a an employment contract." (Pissarides (2000)). The net changes in employment are used to determine job gains and losses and net job creation (see BLS publications). By the way, this is not terribly "arcane" or "esoteric" meaning, it is the meaning used in the popular press and in competing partisan claims. When a politician claims that he/she "created" four million jobs that would otherwise not exist and quotes employment data they are not speaking about unfilled openings. The paper's authors and the op used the term "job creation" as commonly understood.

So, the finding of the working paper (Hagedorn, Mitman, and Manovskii) is that the ending of extended unemployment benefits at the end of 2013 explains a large portion of the labor-market boom in 2014. The "job creation" in 2014, meaning filled jobs (not unfilled or non-existent job offerings), amounted to (in their estimate) 1.8 million jobs in the labor force (about 60 percent of the 2014 gain).

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.

Few people in this thread would concede that the world is round if their politics were vested in the belief of a flat earth. However the unemployment economic literature, as well as economic theory, suggests that if you pay people not to work (unemployment) you will (to some degree) succeed. But there is also more than one way the disemployment effect of UI works, and there is a wide range of estimates as to how strong or weak that effect is.

Actually, the authors of the op paper (and the authors related one a year ago (https://www.dropbox.com/s/p6711tak9ly8r6e/UI_&_U.pdf?dl=0)) don't say cutting benefits alone induced folks back to work, but that the resulting lower wage cost to hire (wages no longer have to compete with unemployment benefits) induced employers to hire more workers. In the prior paper they argue that the extended benefits raised wage levels needed to recruit a worker, but when they expired in 2013 and employers no longer had to pay so much they increased job openings and hired more workers.

These two papers and the one Trausti linked to above at the NYFRB explain the dynamics of job creation. Were the effects of ending extended unemployment as strong as the authors claim? I remain an agnostic on that issue.

The ending of benefits added workers to the wanting work pool yes. The benefit ending did not create a single job. So about 3 million jobs were added in 2014 and maybe one million were filled by those who had lost benefits.

I'm not an agnostic here.

Ending benefits did not increase jobs. Instead it increased the population looking for work creating more competition for available jobs. Is that good?

If benefits were continued and the job market improved and benefits remained some would have opted to enter the market, but, many more would have some money to spend because of benefits which would have increased the pressure for creating more jobs. I believe the ending of benefits was a drag on what should have been a remarkable year rather than a good year for jobs.

The preliminary report is a deceitful work benefits butchery bit of 'now you see it' economic duplicity.

 

[maxparrish]

Because the contextual meaning of the terms "vacant job" and "job vacancy" is synonymous to "vacant position" and "position vacancy". I doubt the term "job" confused any but the most tone deaf, but might have been better stated as a "vacant position" and "new position vacancy". Fortunately, except for the occasional pedantic Cheshire Cat, the plain meaning to most is clear: when an existing or new job (position) is filled that constitutes job creation.

"Job creation takes place when a firm and a worker meet and agree to a an employment contract." (Pissarides (2000)). The net changes in employment are used to determine job gains and losses and net job creation (see BLS publications). By the way, this is not terribly "arcane" or "esoteric" meaning, it is the meaning used in the popular press and in competing partisan claims. When a politician claims that he/she "created" four million jobs that would otherwise not exist and quotes employment data they are not speaking about unfilled openings. The paper's authors and the op used the term "job creation" as commonly understood.

So, the finding of the working paper (Hagedorn, Mitman, and Manovskii) is that the ending of extended unemployment benefits at the end of 2013 explains a large portion of the labor-market boom in 2014. The "job creation" in 2014, meaning filled jobs (not unfilled or non-existent job offerings), amounted to (in their estimate) 1.8 million jobs in the labor force (about 60 percent of the 2014 gain).

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.

Few people in this thread would concede that the world is round if their politics were vested in the belief of a flat earth. However the unemployment economic literature, as well as economic theory, suggests that if you pay people not to work (unemployment) you will (to some degree) succeed. But there is also more than one way the disemployment effect of UI works, and there is a wide range of estimates as to how strong or weak that effect is.

Actually, the authors of the op paper (and the authors related one a year ago (https://www.dropbox.com/s/p6711tak9ly8r6e/UI_&_U.pdf?dl=0)) don't say cutting benefits alone induced folks back to work, but that the resulting lower wage cost to hire (wages no longer have to compete with unemployment benefits) induced employers to hire more workers. In the prior paper they argue that the extended benefits raised wage levels needed to recruit a worker, but when they expired in 2013 and employers no longer had to pay so much they increased job openings and hired more workers.

These two papers and the one Trausti linked to above at the NYFRB explain the dynamics of job creation. Were the effects of ending extended unemployment as strong as the authors claim? I remain an agnostic on that issue.

The ending of benefits added workers to the wanting work pool yes. The benefit ending did not create a single job. So about 3 million jobs were added in 2014 and maybe one million were filled by those who had lost benefits.

I'm not an agnostic here.

Ending benefits did not increase jobs. Instead it increased the population looking for work creating more competition for available jobs. Is that good?

If benefits were continued and the job market improved and benefits remained some would have opted to enter the market, but, many more would have some money to spend because of benefits which would have increased the pressure for creating more jobs. I believe the ending of benefits was a drag on what should have been a remarkable year rather than a good year for jobs.

The preliminary report is a deceitful work benefits butchery bit of 'now you see it' economic duplicity.

You wrote that "Ending benefits did not increase jobs. Instead it increased the population looking for work creating more competition for available jobs."

First, something increased jobs boost of 2014. The recovery from the March 2009 bottom has been widely credited as one of the slowest (perhaps the slowest) in US history, contributing to the fair perception of it being a 'jobless' recovery. For three and a half years the recovery only lowered the unemployment rate .3 to .5 percent per year, while the labor participation rates declined. In 2013 employment picked up considerably, doubling the rate of unemployment decline (although labor participation kept declining which offset it somewhat).

But in 2014 it was a different story:

"approximately 252,000 jobs were created in December, above average for the year.The monthly average for job growth in 2014 was 246,000 new jobs per month, well above the monthly rate for 2013, which averaged 194,000 new jobs per month.

The number of unemployed workers for December was 8.7 million, down by 383,000 from November. Over the year, the unemployment rate dropped by 1.1 percentage points and the number of unemployed declined by 1.7 million workers." http://www.ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx

Second, "the economy has now added at least 200,000 jobs for 10 straight months, the longest such stretch in more than 30 years. Already the U.S. has generated 2.65 million new jobs in 2014, the biggest increase since a 3.2 million gain in 1999" http://www.marketwatch.com/story/321000-jobs-added-to-economy-in-november-2014-12-05

Last, it seems that the yearly fall in labor participation leveled out in 2014. Hence, on the net the economy has been adding jobs.

That does not mean that true unemployment rate is not disturbingly high BUT at least labor participation is not getting worse and real job growth was boosted in 2014.

 

[laughing dog]

Because the contextual meaning of the terms "vacant job" and "job vacancy" is synonymous to "vacant position" and "position vacancy". I doubt the term "job" confused any but it might have been better stated as a "vacant position" and "new position vacancy". Fortunately except for an occasional pedantic Cheshire Cat, the plain meaning to most is clear: when an existing or new job (position) is filled that constitutes job creation.

The definition is clear, but it is not common usage. And one wonders why not simply call it "hiring". Because it the clear sense of "creation", hiring someone does not necessarily create a job. Otherwise, there could be nothing like a vacant job or a job vacancy.

Few people in this thread would concede that the world is round if their politics were vested in the belief of a flat earth.

Projecting your m.o. onto others is not analysis.

However the unemployment economic literature, as well as economic theory, suggests that if you pay people not to work (unemployment) you will (to some degree) succeed. But there is also more than one way the disemployment effect of UI works, and there is a wide range of estimates as to how strong or weak that effect is.

Actually, the authors of the op paper (and the authors related one a year ago (https://www.dropbox.com/s/p6711tak9ly8r6e/UI_&_U.pdf?dl=0)) don't say cutting benefits alone induced folks back to work, but that the resulting lower wage cost to hire (wages no longer have to compete with unemployment benefits) induced employers to hire more workers. In the prior paper they argue that the extended benefits raised wage levels needed to recruit a worker, but when they expired in 2013 and employers no longer had to pay so much they increased job openings and hired more workers

The paper Trausti cited did actually have that causal relation. It would be more empirically meaningful if the authors had been able to sort the results by industry given that UIC differ widely by industry. And, the authors did not bother to control for other effects that might have caused employers to wish to hire more workers.