More on unemployment and unemployment insurance in the USA

According to economist Robert Barro, the high unemployment rate and high share of long term unemployment in the United States (see a previous note on duration of unemployment) are consequences of the extension to unemployment insurance benefits (which passed from 26 to 99 weeks) implemented by President Obama (opinion supported by Becker and Posner, see a previous note here). The perverse outcomes of the unemployment insurance had been robustely confirmed by the experience of the Wester European countries. The economic team of the President Obama went ahead with this proposal argueing that during a strong recession like the one during 2008-2009 the unemployment is the result of a weak economy that does not demand enough jobs while labor supply (the willigness of people to work) does not matter that much. Recent evidence, though, signals that indeed labor supply is having a role: i) Barro mentions the job creation rate (the number of new openings) is still very high during the recession, and ii) as documented by Mulligan, willigness to work during the summer by teenagers is reflected in higher employment in this season. The evidence suggest thus that public policies, such as the extension of the unemployment insurance, that are eroding work incentives may explain the high unemployment.