Unemployment benefits are social welfare payments made by the government, state, or other authorized bodies to unemployed people.

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100
6 votes
Jul 3, 2015

Obviously, the answer lies somewhere in the definition of the word "cause."

"Unemployment," as a phenomenon, is a trend among millions of workers, in a variety of contexts, each with a complicated causal factor set. The number of people who gain and lose jobs every year dwarfs the total number of folks who were unemployed for that year; from that perspective, "unemployment" figures are an equilibrium, affected by fundamentals, and effects at the margin. When I say "at the margin," I mean the folks who were the last hired and fired- the ones that are affected by a company's decision to say, lay off 110 workers rather than 100. You could call them "the most employable unemployed" and the "least employable employed."

For any individual unemployed person, their previous rate of pay, their savings and assets, their skill set, where they live, the cost of moving elsewhere, the reason they left their previous job, availability of government benefits both temporary and permanent, etc. are all "causes" of their unemployment. Meta factors like consumer demand, government spending, unemployment compensation policies, etc. are still factors, but it's important to know that they are almost invisible at the individual level. I've heard it stated, and I think it's probably true, that if it weren't for statistics and newsmedia, the average person would not be able to discern the difference between 4% unemployment and 10% unemployment. They would notice local pockets of unemployment, for sure; but they would have no idea whether their local phenomena were offset by local phenomena elsewhere.

Only in the most myopic sense is unemployment "the unwillingness of a worker to accept a job at a rate offered," coupled with "the unwillingness of an employer to pay a rate at which the worker is willing to work." That said, jobless benefits obviously and axiomatically factor into that equation for each worker for whom they are available. Now, that probably doesn't change the balance of the equation for the vast majority of unemployed and employed people. However, at the margin, there will be "the most employable unemployed" and the "least employable employed" who would have taken a job but for their government benefits, or not taken a job had they had slightly more government benefits.

Having an effect at the margin undeniably "causes" an increase in unemployment. The magnitude of that change is dependent on the marginal benefit of employment to those who would be employed but for the benefits; and that is where the real tough economic analysis lies in the joblessness/unemployment benefits debate.

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60
5 votes
Jul 3, 2015

No, unemployment is caused by a lack of demand. The lack of demand is caused by low wages (fewer people buying things means less profit). Low wages are caused by short sighted folks searching for high profit margins as opposed to a steady stream of long term growth with slightly lower profit margins in the short term.

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0 votes,
Jul 3, 2015

This indeed is the cause. Lack of demand caused by the lack of income growth by the middle class. When the top 1% takes all the income growth in the country than exports many of the jobs, then demand from the middle class goes away, which reinforces the unemployment problem.

Be prepared for a lot of angst from Wall street caused by slow growth.

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User voted No.
0 votes
Jul 18, 2015

Just exactly like food causes hunger, and air causes asphyxiation, and fighting for freedom and peace gives us a safe and secure world.

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0
0 votes
Sep 28, 2015

There may be some effects that way. There may also be some countervailing factors.

What I'd suggest is that, insofar as unemployment benefits cause unemployment, that can actually be a good thing.

Milton Friedman suggested once that unemployment goes down when workers lose hope for better pay. We actually want workers to have a good negotiating capability with employers. We want people to be able to spend longer to find the right workplace for them rather than less time to find a workplace that they will hate and contribute minimally to. Unemployment facilitates that.

Moreover, unemployment benefits also help people seek out appropriate education and job training. Unemployment even in relatively ideal conditions comes about when the economy makes adjustments. Climate might shift, or there may be a demographic adjustment, or there may be a technological change. When cars came into vogue, unemployment benefits would have helped carriage makers and drivers find new work. We want people to be able to spend time between jobs to be with their families, build themselves, and enter the workforce renewed.

In other words, the very point of unemployment benefits is to make unemployment a more valuable period instead of a harrowing trial. We want people to be able to quit workplaces that don't work for them or be able to risk being fired without it ending their life.

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User voted No.
0 votes
Sep 29, 2015

I don't believe so. Here is a website where you can see the maximum pay out per week of unemployment benefits, and the maximum amount of weeks you can receive benefits:

fileunemployment.org/unemployment-benefits-by-state

Keep in mind that many people get considerably less than these maximums. Unemployment benefits might inspire people to see if they can get by eating only scrambled eggs and Ramen noodles, they might tempt people to run up their credit card debt to pay the utility bills, gas up the car to drive to interviews, maybe even pay their rent, if their landlord/landlady accepts credit cards. But the idea that people would either become unemployed or remain unemployed just to collect this money? I really doubt it.

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