Here’s a letter to the New York Times:
Paul Krugman says that it is “bizarre” during today’s downturn to worry that unemployment benefits reduce people’s incentives to find jobs — indeed, that this concern is even at odds with “textbook economics” (“Senator Bunning’s Universe,” March 5).
Prof. Krugman must count himself and his wife, Robin Wells, among those who hold bizarre ideas – or who, when writing economics textbooks, misrepresent economists’ views. Here’s what they wrote on page 210 of their jointly authored textbook Macroeconomics (2nd ed.), published in 2009: “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.”
Sincerely,
Donald J. Boudreaux
(HT to Walter Williams, who sent me James Taranto’s smackdown.)
UPDATE: I’ve modified the opening paragraph of my letter, and have sent the revised version to the NYT. I do not, though, see that it changes anything substantive. It remains over-the-top misguided to label as “bizarre” the concern that the disincentives that unemployment benefits unleash on searching for and accepting employment might outweigh any pro-employment stimulative effects of these benefits.
