Reducing the duration of unemployment benefits as arecession progresses can speed economic recovery

Abstract

In the aftermath of the Great Recession, millions of Americans received extensions to their unemployment benefits – in some cases extending them to 99 weeks. At the end of 2013, these extended benefits expired, leading many to call on Congress to reauthorize their extension. But does extending unemployment benefits make sound economic sense? In new research, Stanislav Rabinovich and Kurt Mitman argue that the government was correct to rein in the duration of benefits. They write that reducing the duration of benefits helps the unemployed to find jobs faster, and leads to much less volatile unemployment.