Will Work for Unemployment

Nick Gillespie from the June 1997 issue

Who benefits more often from repeated use of unemployment insurance: workers who lose a particular job permanently or seasonal employees who are laid off and eventually rehired time and again? "Repeat Use of Unemployment Insurance," a recent National Bureau of Economic Research Working Paper, attempts to answer this question.

Using data from Georgia, Idaho, Missouri, Pennsylvania, and Washington state for 1979 through 1984, Northwestern University economists Bruce D. Meyer and Dan T. Rosenbaum discovered that while most recipients only drew benefits once during the five- year period, almost 40 percent of claims went to individuals who drew benefits three or more times. Construction and manufacturing, note the authors, accounted for over 75 percent of claims, even though those industries represent less than one-third of overall employment. They also found that "middle-aged and high-paid workers are more likely to be repeat recipients" and "may prefer to be laid off and receive [unemployment insurance] for part of the year."

Such results, conclude Meyer and Rosenbaum, "suggest that a substantial portion of [unemployment insurance] resources subsidize certain firms and industries rather than provide true insurance."

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