Tag: Unemployment

The Double Faustian Minimum Wage Bargain of 2007 »

In an ordinary Faustian bargain, a mortal sells his (or her) soul to an incarnation of the Devil in exchange for worldly power. However, in 2007 an extraordinary double Faustian bargain took place, in which, in effect, Lucifer and Mephistopheles both gave up their own souls, in exchange for the other’s. In 2006, Democrats…
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Why Are So Many Economists Confused About Obamacare’s Effects on Jobs? »

What’s wrong with the business economists? Have they forgotten everything they learned in Econ 101? Casey Mulligan explains it for the umpteenth time: As far as I know, before this month the only place that one could read about the Affordable Care Act’s new employment tax was in this paper by David Gamage, in…
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Krugman Plays a Mulligan »

The CBO now estimates that Obamacare will reduce the labor supply by the equivalent of 2.4 million jobs by 2024. The main reason: the implicit marginal tax rates created by the withdrawal of the Obamacare tax subsidies in the health insurance exchanges. Like unemployment insurance, food stamps, and other welfare benefits, government help gets…
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Krugman: “Why aren’t wages going up?” »

In his New York Times column yesterday, Princeton economist Paul Krugman argues that unprecedented extended unemployment benefits can’t have been the cause of the unprecedented average duration of unemployment during the “Great Recession.” He reasons, “If unemployment is high because people are unwilling to work, reducing the supply of labor, why aren’t wages going…
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New Year’s Revolution »

Millennials, already disproportionately suffering under the enduring Great Recession, likely have a bleak 2014 in store. Millennials suffer unemployment rates 50% higher than their elders. When you add in those working part-time while looking for full-time work, that already-high figure doubles. And half of last year’s college graduates work in jobs that don’t require…
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The Independent Review—Winter Issue Now Available »

The winter 2014 issue of The Independent Review is hot off the press! This edition of the Independent Institute’s 160-page scholarly journal includes a stimulating mix of timely topics and enduring themes, including a symposium on Nobel laureate economist James M. Buchanan and classical liberalism. Read it and gain a deeper understanding of the…
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Eliminate Long-Term Unemployment Compensation »

Unless Congress decides to extend it, long-term unemployment compensation will expire on December 28. Unemployment compensation has typically been available for up to 26 weeks of unemployment, but has been extended during the past recession to up to 99 weeks. When you pay people to be unemployed, then not surprisingly, you get more unemployed…
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“Job Lock” from Employer-Based Health Benefits: What Should Government Do? »

Back in 1993, the economists Jonathan Gruber and Brigitte C. Madrian highlighted the problem of “job lock,” a consequence of employer-based health benefits. Job lock referred to the fact that the U.S. Internal Revenue Code does not tax employees’ health benefits if they are provided through employers’ group plans. However, if employers gave the…
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What Paul Krugman Can Learn from Milton Friedman »

Years ago, Milton Friedman was asked at a conference what he thought about different schools of economics (Chicago school, Austrian school, etc.) Friedman replied, “There are only two kinds of economics: good economics and bad economics.” I’m reminded of this by Krugman’s Monday column, in which he asserts that there is a Republican economic…
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A Chance to End the Great Recession »

It is elementary economics that subsidizing an activity encourages it to expand, while taxing an activity encourages it to shrink. Unemployment benefits subsidize unemployment and are paid for, sooner or later, by taxes on employment. The natural result is more unemployment and less employment. The current “Great Recession” has only been the second worst…
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