😀

“And I mostly agree with 1-4) I’ve always been specifically disagreeing with your claim that even if long-term unemployed are there by choice that is OK.”

Ahhh ok, I will move to discussing that then.

That is solely a value judgment – I could appeal to diminishing marginal utility and state that ex-post redistribution is welfare maximising as long as the ex-ante impact on production is sufficiently small. As a result, I will assume that it is maximising, and that the impact is small 😛

I like arguments along the lines of “Aha, the lack of data supports my point”. We have data on duration for HLFS unemployment and Social Welfare unemployment, both suggest duration is short.

And I mostly agree with 1-4) I’ve always been specifically disagreeing with your claim that even if long-term unemployed are there by choice that is OK.

We don’t know that – as we can’t measure the number of discouraged workers.

“I know you’re being a devil’s advocate today”

Wait till you see my next benefit post! I will eventually put down my position, but before that I have a couple of other positions to raise 😛

“So why not just say that to begin with?”

Not a convincing defense!

I’m stating that people on long-term welfare do not need to be victimised – they are the victims of inefficient signals in the labour market that cannot be solved. As a society we should be willing to look after those people.

Now I realise that I have made two (maybe three) value judgments, but that does not necessarily mean they are wrong, fundamentally:

1) Long-termed unemployed are not their by choice,
2) Society values fairness,
3) It is fair for society to look after those who are punished by unfortunate circumstances.
Therefore:
4) Society should look after long-termed unemployed – instead of focusing on “welfare dependency” in that way.

I don’t dispute the existence of efficiency wages, I’m just skeptical that the macro-level result that they lead to unemployment would hold up once we introduce heterogeneous agents and employers. As I said before, empirically, most NZ employment is very short-term, and a substantial majority of the unemployed left their previous job voluntarily.

I know you’re being a devil’s advocate today (your alter ego needs a name by the way, “mattilda” perhaps :;), but it seems you initial post was basically:
“I’m going to defend an unpopular value judgement”;
to which I said “that’s not a very convincing defence”;
to which you replied “well it’s just a value judgement”.

So why not just say that to begin with?

Because thats how it works, right?

Efficiency wages – I think they are a large part of reality – however this will be discussed in the next benefit post.

“Wouldn’t unemployment benefits lead to a higher unemployment rate in that model?”

Unemployment is people who are willing to work but can’t find work – the higher the benefit, the less people are willing to work 😛 . However, if the benefit is dependent on being “willing to work” then the recorded unemployment rate would be higher.

Still, this has nothing to do with the fact that efficiency wages cause structural unemployment.

“Doesn’t anything? Do you really want to defend a positive right to laziness?”

Yes. However, I was just making it clear that the distinction between our points of view in this post (as this isn’t necessarily my true point of view) is based on different value judgments – rather than us having different objective models. I was not trying to say that what I was saying was positivist – it was definitely not.

Hi David,

What you describe is an example of the unluckiness that government can help through these welfare policies. However, I would not blame the government for the fact that community where you grew up had issues – the community, and the individuals involved, have to take some responsibility. The government cannot solve all social ills – even if it wanted to.

Wouldn’t unemployment benefits lead to a higher unemployment rate in that model? Even assuming the result did hold, surely a realistic extension would still be to model the unemployment as higher search costs, so unemployment would still be transitory.

“Doesn’t this depend on what we believe is fair.” Doesn’t anything? Do you really want to defend a positive right to laziness? I think that will be difficult to do with the arguments commonly used to justify the other positive rights.