Federal Reserve: Extended Unemployment Benefits Reduces Job Search Efforts

In the <DUH!>, slap your forehead department, the Federal Reserve has recently declared that:

"Longer benefits may reduce the unemployed workers' job search efforts, decreasing their likelihood of becoming reemployed."


"Extended benefits may also encourage unemployed workers to remain in the labor force to collect benefits, when they may have exited the labor force completely otherwise. Both these channels increase the unemployment rate in the short term."

"Without extended UI benefits, these unemployed workers would have been more likely to be employed, more likely to exit the labor force, and on average 1.9 percent less likely to remain unemployed in the following period. In short, our simulated early termination of the EUC program lowered the unemployment rate by 3 to 5 basis points, suggesting that the December 2013 expiration of the EUC program might have slightly lowered the unemployment rate in early 2014."

http://research.stlouisfed.org/publications/es/14/ES_16_2014-07-03.pdf

 

I've noticed a definite shift since Yellen became chairperson of the Fed. She's not in lockstep with Obama on many things, unlike Bernanke.