Chris
12-09-2012, 12:51 PM
The main idea is, I start by looking at changes in public policy that affect regular families. So, I'm not looking at banking policy and things like that. Things that affect regular families: the Unemployment Insurance (UI) program, Medicaid program, food stamp program, other safety net programs that can help people when their incomes fall or they are out of a job. I looked at those; I looked at how they were run before the recession; I looked at how they were run during the recession. And there were changes, significant changes. And then I tried to quantify that. Some of the changes were pretty important. Others were more minor. I tried to quantify those things and come up with kind of a total impact of the new government rules on how much help you could get when your income was low or you were out of a job or both. And then I said: Okay, once I have an understanding of how much help and incentives change, then I ask: When that much help comes along, how much does that affect people's behavior? Economists have studied that second question a long time, and all I do is bring it into the 21st century, and say: we have 21st century rules changes here; what kind of changes in the labor market should we expect? And the answer was: Well, labor markets should be depressed as a result of those rule changes. And I work out how much, and it turns out about half, probably a little more of the depression of the labor market you can link directly to these new rules for helping people when they are unemployed or have low incomes.
That's the opening of the podcast Mulligan on Redistribution, Unemployment, and the Labor Market (http://www.econtalk.org/archives/2012/12/mulligan_on_red.html) (note available at link).
Here's my brief summary: Unemployment insurance and other unemployment policy changes increased enough to change the incentive away from seeking employment to adjusting one's spending in order to accept unemployment the way a retiree would, say about 20% less spending. But not only is it costing us more to fund unemployment, those who this choose unemployment reduce demand on productivity. The notion that increasing funding unemployment in order to stimulate the economy doesn't work (pardon the pun).
That's the opening of the podcast Mulligan on Redistribution, Unemployment, and the Labor Market (http://www.econtalk.org/archives/2012/12/mulligan_on_red.html) (note available at link).
Here's my brief summary: Unemployment insurance and other unemployment policy changes increased enough to change the incentive away from seeking employment to adjusting one's spending in order to accept unemployment the way a retiree would, say about 20% less spending. But not only is it costing us more to fund unemployment, those who this choose unemployment reduce demand on productivity. The notion that increasing funding unemployment in order to stimulate the economy doesn't work (pardon the pun).