Bad Incentive Structure

Greg Mankiw:

when I hear economists advocate the extension of UI to 99 weeks, I am tempted to ask, would you also favor a further extension to 199 weeks, or 299 weeks, or 1099 weeks? If 99 weeks is better than 26 weeks, but 199 is too much, how do you know?

Unemployment insurance ought to be of a short duration. When it lasts more than a year, it starts to look like a lifestyle choice. Besides taking money away from productive sectors of the economy and handing it to people who aren't working isn't a smart policy.

Comments

[Classical Liberal]

Sort of on-topic: Isaac, what do you think of this essay? http://www.prudentbear.com/index.php/thebearslairview?art_id=10477