Allright, this goes out to the financial engineers in the audience.  How many of you caused a ton of damages in the financial economy because you never really got a solid handle on modeling liquidity in your theories and work?  Raise your hands.  It’s ok, this is a safe space.  (Slight hand raise here.)

Don’t feel too bad, because certain academics, economists and government ideologues are going to cause a ton of damages in the real economy by arguing against unemployment insurance without also having a decent theory of liquidity.   People are worried about the bad incentives of unemployment insurance in the abstract, but they are confusing bad work incentives with the effects of “cash-on-hand” (liquidity). So let’s look at some evidence.

Here’s two presentations from Raj Chetty at a recent Economic Policy Institute event on the long-term unemployed. He presented his research about where unemployment insurance stands not…

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About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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