STUDY: Obama's Unemployment Policies Increased Unemployment

Conn Carroll
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Posted: Jan 26, 2015 12:35 PM
STUDY: Obama's Unemployment Policies Increased Unemployment

President Obama's continued efforts to extend unemployment insurance kept the nation's unemployment rate high long after the recession ended, according to a new economic study.

Normally, unemployed persons are entitled to up to 26 weeks of unemployment insurance benefits. But during the most recent recession, Obama gave states more resources to offer more benefits. By the end of 2013, three states offered 73 weeks of benefits, 20 states offered between 61 and 63 weeks, nine states offered between 54 and 57 weeks, and 18 states offered between 40 and 49 weeks.

But at the end of 2013 House Republicans finally stopped funding the extensions and all states reverted to the normal 26 week time limit.

This created a natural experiment for economic researchers to compare unemployment rates in states with longer unemployment eligibility to unemployment rates in states with shorter eligibility timeframes. 

Marcus Hagedorn of the University of Oslo, Iourii Manovskii of the University of Pennsylvania, and Kurt Mitman of the Institute for International Economic Studies did such a study and they found that instead of destroying 240,000 jobs, which is what Obama's top economists predicted, the end of Obama's unemployment insurance polices actually created 1.8 million jobs. 

"Almost one million of these jobs were fi lled by workers from out of the labor force who would nothave participated in the labor market had bene t extensions been reauthorized," the study's abstract explains. 

An earlier study by the same authors found Obama's unemployment insurance policies raised the unemployment rate by 3.6 percentage points during the recent recession.