Gee, we wonder what could account for the marked increase in long-term unemployment that has occurred during President Obama’s presidency? Liberal blogger Matthew Yglesias clearly has no clue, but here’s what President Obama’s former Treasury Secretary Larry Summers wrote in The Concise Encyclopedia of Economics:
To fully understand unemployment, we must consider the causes of recorded long-term unemployment. Empirical evidence shows that two causes are welfare payments and unemployment insurance.
Unemployment insurance also extends the time a person stays off the job. [Kim] Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months. If unemployment insurance were eliminated, the unemployment rate would drop by more than half a percentage point, which means that the number of unemployed people would fall by about 750,000. This is all the more significant in light of the fact that less than half of the unemployed receive insurance benefits, largely because many have not worked enough to qualify.