From Tyler Cowen's Marginal Revolution, a note on the habits of the unemployed:
I had not known of this Scott R. Baker and Andrey Fradkin paper until recently, here is the abstract:
The large-scale unemployment caused by the Great Recession has necessitated unprecedented increases in the duration of unemployment insurance (UI). While it is clear that the weekly payments are beneficial to recipients, workers receiving benefits have less incentive to engage in job search and accept job offers. We construct a job search activity index based on Google data which provides the first high-frequency, state-specific measure of job search activity. We demonstrate the validity of our measure by benchmarking it against the American Time Use Survey and the comScore Web-User Panel, and also by showing that it varies with hypothesized drivers of search activity. We test for search activity responses to policy shifts and changes in the distribution of unemployment benefit duration. We find that search activity is greater when a claimant’s UI benefits near exhaustion. Furthermore, search activity responses to the passage of bills that increase unemployment benefits duration are negative but short-lived in most specifications. Using daily data, we estimate that an increase by 1% of the population of unemployed receiving additional benefits results in a decrease in aggregate search activity of 1.7% lasting only one week.
One way (not the only way) of reading these results is to wonder if some of the unemployed feel they ought to increase their shirking in response to an extension of benefits, but they actually don’t really want to do so. They shirk a bit more, for a short while, not to feel like fools, and then return either to active search or fruitless despondent search, as the case may be. For better or worse, habit dies hard.
For the pointer I thank John Horton.
Conor Sen, by the way, tells us that “ask for a raise” is at a post-recession high on Google Trends.
- See more at: http://marginalrevolution.com/#sthash.H2wJHD6Z.dpuf