Wednesday 708

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 9 The Real Economy in the Long Run
Chapter 28 of 36 Unemployment
Section 7 of 21
…
Measuring the economy’s unemployment is not a straightforward task.
For example
· it is easy to distinguish between a person with a full-time job and a person who is not working at all
· it is not easy to distinguish between an unemployed person and a person not in the labor force
...
People commonly move into and out of the labor force.
More than a third of the unemployed are recent labor force entrants.
These recent entrants include
· young workers looking for first jobs, e.g. recent college graduates
· older workers who left the labor force previously but have now returned to look for work
Not all unemployment ends with the job seeker finding a job.
Almost half of unemployment periods end when the unemployed person leaves the labor force.
...
Because people often move into and out of the labor force, unemployment statistics are difficult to interpret.
Some of those who report being unemployed may not actually be trying to find a job, because
· they want to qualify for government programs that financially assists the unemployed
· they are working, but paid in cash to avoid income taxes
It may be more truthful to consider these individuals as out of the labor force in the first case, or employed in the second.
...
Some of those who report being out of the labor force may want employment.
These people may have searched for a job and then given up after being unsuccessful.
Such people, are called “discouraged workers.”
They do not show in unemployment statistics, but they truly are workers without jobs.
...
Because of these and other problems the Bureau of Labor Statistics calculates several alternative measures of labor underutilization, shown in Table 2.
Overall, the official unemployment rate can best be viewed as a useful but imperfect measure of joblessness.
…
useful but imperfect measurement
yūyōdaga kanpekina i sokutei
有用だが完璧ない測定
… …
The government-paid unemployment benefit good-or-bad debate. ChatGPT:
The government-paid unemployment benefit debate is about whether unemployment insurance helps stabilize workers and the economy, or whether it weakens work incentives and raises costs.
…
Argument that unemployment benefits are good:
Supporters say unemployment benefits protect people who lose jobs through no fault of their own.
They help families keep paying for food, housing, utilities, transportation, and medical needs while searching for work.
Economically, benefits can also soften recessions because unemployed workers keep spending money, which supports local businesses.
Supporters also argue unemployment insurance gives workers time to find a suitable job instead of being forced into the first low-quality job available.
…
Argument that unemployment benefits are bad:
Critics say generous or long-lasting benefits can reduce the urgency to find work, especially if the benefit is close to what a person earned on the job.
They argue this can increase unemployment duration, raise government spending, increase taxes or borrowing, and make it harder for businesses to hire.
Some critics also believe unemployment programs can be abused or can create dependency if not carefully limited.
…
Middle-ground view:
Many economists support unemployment benefits in principle but disagree about how generous they should be and how long they should last.
A common compromise is to provide enough support to prevent hardship, but not so much that work becomes unattractive.
Benefits are often viewed as most useful during recessions, when jobs are scarce, and more questionable during strong labor markets, when jobs are easier to find.
…
Bottom line:
Unemployment benefits are generally considered good as a temporary safety net and economic stabilizer.
But they can become harmful if they are too generous, too long-lasting, poorly monitored, or disconnected from job-search expectations.
…
-Government-paid unemployment benefits raise costs details:
Government budget costs: the government has to pay the unemployment checks, which increases public spending.
-Taxpayer costs: those payments are funded by taxes, especially payroll taxes on employers, and sometimes by general tax revenue.
-Employer costs: unemployment insurance is often partly funded through employer payroll taxes. If many former employees claim benefits, an employer’s unemployment insurance tax rate can rise.
-Borrowing costs: during recessions, unemployment payments can rise sharply. If taxes do not cover them, government may borrow more.
-Administrative costs: the program costs money to run, monitor, verify claims, prevent fraud, and process payments.