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Not Terribly Original of Me, but It Must be Pointed Out to the Gray Lady

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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 [2],” 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 [3]Macroeconomics [3] (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 [4], who sent me James Taranto’s smackdown [5].)

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.

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