President Obama’s pick as chairman of the White House Council on Economic Advisors co-authored a paper that showed that extending unemployment benefits will likely exacerbate joblessness. The paper’s findings run counter to the president’s economic argument for an unemployment benefit extension, which is expected to be a major part of the jobs plan he will unveil early next month.
Princeton University economist Alan Krueger, who will replace Austan Goolsbee as the White House’s chief economic advisor, “is likely to provide a voice inside the administration for more-aggressive government action to bring down unemployment and, particularly, to address long-term joblessness,” according to a report in the Wall Street Journal.
But will Krueger’s recommendations jive with the president’s apparent economic and political agenda? Krueger co-authored a paper for the Handbook of Public Economics in 2002 that seems to undercut the economic argument for extending unemployment benefits. The paper found that those benefits tend to increase the length of unemployment by discouraging the search for a new job, and may actually encourage layoffs. Conversely, the paper also found that unemployed persons who are ineligible for benefits search harder for a job and are therefore unemployed for less time.