Job Creation in 2014

January 29th, 2015 11:03 am | by John Jansen |

A fully paid up subscriber sent this abstract of a research paper from the NBER which posits that the job gains in 2014 were a result of the decision by Congress in late 2013 to not reauthorize extensions of emergency unemployment benefits.

Access to the full paper is available for $5.

Via the NBER:

Marcus Hagedorn, Iourii Manovskii, Kurt Mitman

NBER Working Paper No. 20884
Issued in January 2015
NBER Program(s):   EFG

We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.

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  1. 2 Responses to “Job Creation in 2014”

  2. By Jacques on Jan 29, 2015 | Reply

    That 1.8 million additional jobs were created as a result of unemployment insurance cuts last year is ludicrous on its face.

    First, lack of demand for jobs has not been an economic issue for years now if not for decades — in fact just the opposite is true. Lack of supply of employment and business opportunities is our problem. Demand for jobs does not significantly provide their supply, at least in the short and medium term. Jobs aren’t created simply because people want them. If that were the case, millions of people would be billionaires.

    Second, you would have to believe that far fewer jobs would have been available in 2014 than in 2013, despite the fact that the long leading indicators in 2013 predicted continued GDP expansion for the coming year.

  3. By John Jansen on Jan 30, 2015 | Reply

    I would be remiss if I did not note that another reader (with a pristine reputation in the blogosphere) wrote me privately and said that this particular study was trash. Someone sent it and the abstract seemed reasonable so I published it.

    Thanks for your comment.

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