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"Not Terribly Original of Me, but It Must be Pointed Out to the Gray Lady
Posted: 07 Mar 2010 06:12 AM PST
Here's a letter to the New York Times:
Paul Krugman says that it is "bizarre" during today's downturn to worry that unemployment benefits reduce people's incentives to find jobs - indeed, that this concern is even at odds with "textbook economics" ("Senator Bunning's Universe <http://www.nytimes.com/2010/03/05/opinion/05krugman.html> ," March 5).
Prof. Krugman must count himself and his wife, Robin Wells, among those who hold bizarre ideas - or who, when writing economics textbooks, misrepresent economists' views. Here's what they wrote on page 210 of their jointly authored textbook (note: link removed but available at the Cafe), published in 2009: "Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries."
Sincerely,
Donald J. Boudreaux
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