About 60 percent of the job creation in 2014, 1.8 million jobs, they find, can be attributed to the end of the extended-benefits program. That’s a huge amount, and suggests that long-term unemployment benefits, while there’s a good charitable case for them, could have played a big role in the ongoing lassitude of our labor market. (Indeed, an earlier working paper from a few of the same authors argued that extended benefits raised the unemployment rate during the Great Recession by three percentage points; see a summary of that paper here.)
So what was the program Democrats wanted to renew? States run their own unemployment-insurance programs, which provide around 26 weeks of benefits to people who’ve lost jobs and are looking for new ones. But during the recent recession, as they have in other downturns, Congress repeatedly authorized federal extensions that allowed people to draw benefits for much longer. At the end of 2013, the Senate narrowly passed a renewal of the program, but the House never took it up and the extensions, already much longer than any previous recession had seen, expired.
This created something of a “natural experiment.”