TAILIEUCHUNG - Does Unemployment Insurance  Inhibit Job Search? 

Our empirical analysis uses two different data sources: the RobertWood Johnson Foundation’s 1997 Employer Health Insurance Survey (EHIS) and MEDSTAT MarketScan commercially insured health claims and eligibility information for 1998–1999. We first use the EHIS data to examine turnover patterns and their relationship to firm and employee characteristics. The EHIS data reveal that small firms are very heterogeneous; the heterogeneity concerns workers’ turnover rates, besides workers’ age distribution and other health-related demographic variables. The diversity in job turnover rates across firms has received little attention in the literature on the uninsured; in our dynamic model, its presence exacerbates the adverse job turnover problem. Firms with higher turnover. | Does Unemployment Insurance Inhibit Job Search July 2010 Report by the . Congress Joint Economic Committee Representative Carolyn Maloney Chair Joint Economic Committee Does Unemployment Insurance Inhibit Job Search Does Unemployment Insurance Inhibit Job Search The principal purpose of the unemployment insurance UI program is to provide workers with a safety net in the event that they lose their job. However some worry that unemployment insurance benefits may inhibit unemployed workers from vigorously looking for or accepting a new job. Those fears are unfounded. The best evidence suggests that during this current economic downturn both the unemployment rate and duration of unemployment were minimally impacted by unemployment insurance benefits and the extensions of benefits. To the extent that the unemployment rate even rises UI may be providing an enormous social benefit by preventing people not from taking jobs but from dropping out of the labor force altogether and often permanently relying instead on more costly programs like disability benefits. Unemployment benefits are not particularly generous - average weekly benefits are just 74 percent of the poverty threshold for a family of So it is unlikely that extended unemployment benefits inhibit individuals job search efforts. Simply put even a low-paying job is likely to provide more support than that offered by UI. Moreover five unemployed Americans exist for every job opening today which means that individuals who exhaust benefits are unlikely to find a new job with ease. Those who remain jobless and without unemployment benefits will need some form of social assistance in order to avoid complete destitution and are likely to turn to alternative social programs at a cost to the federal government. Extending unemployment insurance benefits is not only a critical form of economic security for American families but also a key form of fiscal stimulus that has the potential to ease pressure on the labor

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