Unintended Effects

Last Wednesday I wrote about the possibility that unemployment insurance payments might cause unemployment. Today I encountered an article in The Economist which seems to support that view, perhaps without meaning to. It says:

While the unemployment rate did drop, to 9.5%, an 11-month low from 9.7%, it dropped for the wrong reason: a lot of people stopped looking for work. This might be because a Senate impasse led to the expiration of extended unemployment insurance benefits early in June. The number of recipients has been falling by about 200,000 per week since. Some of these people may have stopped looking for work (a requirement to qualify for benefits), and thus are no longer counted as unemployed.

Fascinating...people "looking for work" merely in order to qualify for benefits. The clear implication is that some proportion of the unemployed aren't very interested in looking for real work, but will go through the motions to get paid. No wonder the Senate wasn't excited about extending the benefits to the long-term unemployed.