Research Briefing | Jun 30, 2021

US | Enhanced benefits aren’t the labor market’s top problem

Ipad Frame (54)

Enhanced US unemployment benefits are discouraging only a small share of unemployed workers from finding jobs. The disincentive to work is greatest among lower-wage workers in states where the combination of emergency and regular unemployment benefits are the highest relative to prevailing wages.

What you will learn:

  • An increase in the number of people receiving benefits doesn’t dramatically weaken job-search activity, and states offering high replacement wages haven’t experienced significantly slower job growth.
  • In the current environment, low-wage workers in states that aren’t ending the federal emergency benefits early might be tempted to temporarily remain unemployed since they can earn 10%-20% more from unemployment benefits.
  • Health conditions are the most important factor for labor market healing. Cross-correlation analysis indicates states loosen restrictions three to four weeks after a consistent downturn in new cases, which then allows labor markets to heal more quickly.
Back to Resource Hub

Related Services

Post

Why an ageing population doesn’t mean soaring inflation

What’s the future for inflation? Joachim Nagel, the new president of Germany's central bank, believes the rapidly ageing global population will play a key role – ramping up pressure on prices in the medium term. While we agree slowing labour supply will stifle output growth, in his recent discussion Nagel failed to fully consider the demand side of the argument.

Find Out More

Post

Surging global food prices could drive eurozone core inflation higher

Along with energy prices, global food prices have emerged as a key driver of the eurozone's current inflationary surge. Like other advanced economies, eurozone countries tend to be less exposed to global food price fluctuations. But if persistent and combined with strong demand, high food prices could result in a higher pass-through to core inflation.

Find Out More