http://money.cnn.com/2013/02/27/news/economy/unemployment-benefits/index.html?iid=SF_E_River
This article discuses the $85 billion budget cuts that are set to start on Friday. The first area to be hit will be the unemployment benefits that are currently being paid to the unemployed. The state of Indiana was planning on cutting these benefits already but instead decided to hold off. Once this budget cut is in affect it is likely that unemployment benefits will be the first area to be affected. The decrease in unemployment benefits will give an incentive to the unemployed to find jobs more quickly since there will no longer be a check coming to them from unemployment benefits. As this incentive takes affect we will most likely see an decrease in the unemployment rate as more of the unemployed workers find jobs.
people need unemployment to survive, if there was a surplus of labor in the economy then the unemployment benefits could be scrapped, but with it being such a strong issue it would be political suicide to rid of these breaks
ReplyDeleteI agree that cutting unemployment benefits would motivate people to find jobs more quickly, however, this would only help if the main problem is frictional unemployment. If the unemployment is a result of something else, for example, real wages being above equilibrium level, then this move will not help to solve the problem. Instead, this would just leave unemployed workers with less income and could actually end up worsening the situation.
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