Argument: Unemployment insurance does not stimulate the economy

Issue Report: Bush economic stimulus plan


  • James Sherk and Patrick Tyrrell. “Unemployment Insurance Does Not Stimulate the Economy”. Heritage Foundation. January 18, 2008 – “With the economy weakening, some analysts have argued for increasing unemployment insurance (UI) benefits from 26 weeks to 39 weeks to stimulate economic growth. Few studies support the idea that extending unemployment benefits significantly stimulates the economy. In addition, extending UI benefits would do the following:

    • Encourage unemployed workers to stay out of work longer to collect benefits;
    • Encourage employers to wait longer to rehire laid-off workers; and
    • Do relatively little to increase consumption.
To stimulate the economy and create jobs, Congress should increase the incentives for businesses to invest.”