Job market doesn’t work the way models predict

What behavioral economics can teach us about unemployment insurance

Unemployment insurance is a vital safety net, particularly in bad economic times, but because these benefits are only available to those without a job, ample evidence suggests that it may encourage unemployed individuals to remain jobless for a longer period of time. Using insights from behavioral economics, Stefano DellaVigna of UC Berkeley, Attila Lindner of University College London, Balázs Reizer of Central European University, and Johannes F. Schmieder of Boston University suggest an alternative approach to thinking about the way the unemployed look for jobs. ….[READ]

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