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Extended Unemployment Benefits Hurt Jobs, New Report Finds

January 26, 2015

In 2013, Democrats argued that ending a “temporary” unemployment-benefits program would hurt families in need. In fact, they called unemployment benefits “one of the best ways to grow the economy.” At the same time, Republicans argued that the extended benefits program was holding back job creation, which is what the unemployed really needed.

This program, called Emergency Unemployment Compensation (EUC), once contributed the bulk of up to 99 weeks of unemployment checks. Despite Democrats’ opposition, the EUC program ended in December 2013.

Now, the authors of a 2013 study that found EUC stifled job creation are releasing new research showing how, in the real world, the end of EUC contributed significantly to job creation in 2014.

According to these researchers:

• “1.8 million additional jobs were created in 2014” due to the end of EUC.

• “In the aggregate, our estimates imply that [the end of EUC] accounted for about 61 percent of the aggregate employment growth in 2014.”

• “Almost 1 million of these jobs were filled by workers from out of the labor force who would have not participated in the labor market had benefit extensions been reauthorized.”

The paper is “The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?” by Marcus Hagedorn, Iourii Manovskii, and Kurt Mitman—published by the National Bureau of Economic Research.