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Do extended unemployment benefits discourage substantial numbers of people from working?

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As detailed in a peer-reviewed journal published by Cornell University: "Many empirical studies have confirmed the theoretical prediction that longer-term Unemployment Insurance (UI) entitlement leads to longer unemployment duration." The paper further documents that this occurs even in "deeply depressed labor markets," which "suggests that greater focus needs to be put on incentives for rapid reemployment." Likewise, the Federal Reserve Bank of Chicago reports that "many economic studies have shown that workers who receive UI extensions tend to take longer to find new employment, leading to a somewhat longer average duration of unemployment among all workers." As explained by Lawrence Summers, former chief economist of the Obama administration, president emeritus of Harvard University, and former Treasury secretary to President Clinton, "government assistance programs" provide "an incentive, and the means, not to work."

DocumentationCornell StudyChicago Fed StudyLawrence Summers



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