More generous unemployment benefits lead to better jobs: study

More generous unemployment insurance (UI) benefits help workers find better jobs, according to a study at the National Bureau of Economic Research.

“Longer UI benefit durations decrease the mismatch between workers’ educational attainments and the educational requirements of jobs,” wrote the study’s authors, Ammar Farooq, Adriana D. Kugler and Umberto Muratori.

Critics of more generous unemployment benefits argue that receiving cushy benefits for months on end dissuades people from going back to work.

The paper, however, found that having a better safety net let people find jobs that were more in line with their skills and education rather than rushing to take the first job that comes along. That, they argue, is better for the worker, the employer and the economy overall.

Minorities that have less of their own access to credit were particularly helped by additional benefits.

“We also find this effect is greater for women than men, for minority than white workers, for less educated than more educated workers and for older than younger workers, all of whom are more likely to be credit-constrained,” the authors wrote.

The paper’s conclusions come as Congress wrangles over whether and how to extend additional unemployment benefits that were put in place in March as the pandemic hit, but expired last week.

Democrats want to continue providing an additional $600 per week, which studies have shown provides many recipients with a higher payout than their jobs. Republicans say that’s a disincentive to go back to work and that companies are having trouble rehiring workers.

Several studies have shown that with unemployment at historic levels, the problem of employers not being able to rehire workers is not widespread.