Question

What effect does the payment of government unemployment benefits have on the unemployment rate? On the severity of recessions? Do you think that people should be allowed to receive unemployment benefits for 99 weeks?

Answer 1

Unemployment benefit programs are followed by all developed economies to protect workers.The economic effect of unemployment benefits is debatable. As a result of such programs, workers do not have to sell their assets or take up jobs below their qualification.Such programs also help to stabilize the economy during recession.There are both pros and cons of such programs .However, If the benefits are more, than unemployment benefits may raise the unemployment rate.People do not search for jobs if unemployment benefits are generous.In the absence of proper monitoring, the unemployed people may stay unemployed for longer period deliberately to get unemployment benefits.

During recession , unemployment benefits help to stabilize the economy.Such benefits give support to workers during recession and stimulates the economy during period of recession.Even though there is a fear that extending unemployment benefit during recession will increase unemployment, the impact of unemployment benefit on labour market and positive impact on consumption, suggest that giving unemployment benefit during recession is a good policy.

During the great recession unemployment benefit was extended from 26 weeks to 99 weeks.If unemployment benefits continue for a long period,unemployment rate will increase.If benefits given are long ,workers will have less motivation to look for a job and there will be increase in major health issues among the workers for losing a job.As a solution to this, it is necessary to monitor that the worker continues to apply for his job and does frequent health check ups.