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Nobel laureate: limit jobless payouts to a year

AFP/The Local · 10 Nov 2010, 07:40

Published: 10 Nov 2010 07:40 GMT+01:00

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"I would strongly advise the governments not to allow long-term unemployment to build up by providing direct subsidised work experiences to unemployed after nine to twelve months of unemployment," the British-Cypriot economist told AFP on the sidelines of a conference in Stockholm.

"In recession times of course you might extend the period (of unemployment

benefits) a little because there are not enough jobs, but not too much," the 62-year-old labour market expert said.

"You can extend it up to a year but I would be concerned if it was extended unconditionally beyond the 12 months," he added.

Pissarides was awarded the 2010 Nobel Economics Prize last month with two

Americans, Peter Diamond and Dale Mortensen, for their work to resolve puzzles

such as why people remained unemployed despite a large number of job openings.

The London School of Economics professor, who on Tuesday was taking part in

a conference on how the global economic crisis has impacted the labour market,

stressed the importance of work experience for landing a job.

But, he insisted, the "work experience should be in real jobs, not in made-up jobs just for the sake of (getting people) out of their home."

Instead of creating jobs simply for the sake of employing the unemployed, Pissarides suggested that governments for example subsidise jobs usually held

by women on maternity leave.

But if the states go to the trouble of making such meaningful and productive jobs available they need to make sure they are helping people who really want to work, he said.

Story continues below…

If people are offered work but turn it down, "it's like saying: 'Yes, I'm available for a job but I don't want it," he pointed out.

"I don't think unemployment benefits should be given to those who generally

don't want jobs. They should be given to people who want a job but can't find

it," Pissarides said.

AFP/The Local (news@thelocal.se)

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Your comments about this article

08:30 November 10, 2010 by zircon
Makes sense and is good logic.
09:44 November 10, 2010 by Takai
Ladies and gentlemen,

Instead of first cutting the subsides, why do not open an deeper investigation about what is causing this high supply and low demand? We have not read any other alternatives to that situation besides the one saying people do not want to work. It is a plausible opinion, just a little narrowed - minded to be fully accepted. The problems in a country can not be caused for just one reason.

Also, this situation is perfectly normal after an economical crisis, until people start adjust again to the market it takes some time. Maybe Christopher Pissarides`idea is just a little bit too early.

I accept different opinions, as long as constructive and free of any kind of hate.

Thank you!
09:47 November 10, 2010 by isenhand
Economics never makes sense nor is it ever good logic; it's founded on false assumptions and over simplifications that have been demonstrated wrong time and time again and therefore, economics has very little to do with reality. The only thing that surprises me with economics is how it ever has got the status that it has.
09:52 November 10, 2010 by Luckystrike
This theory is almost entirely based on assumptions and generalizations.

You know what they say about assumptions.....they are the mother of all F-ups.
11:33 November 10, 2010 by Streja
He's not a proper laureate. Alfred Nobel never wanted a prize in economics. It's not in his will. They made that one up. Abolish it now.
11:50 November 10, 2010 by krrodman
The most interesting part of his thesis is that governments should subsidize businesses to hire new employees through tax credits etc etc. While at first this seems rather insane - and I can tell you that in the USA this idea always meets resistance from the right wing - in fact it makes perfect sense. It costs the government a fortune to take care of an unemployed person though both direct costs such as unemployment insurance and government health benefits, as well as through indirect costs such as increased crime. The net cost of a tax subsidy is small compared to the real cost of unemployment.

In the USA we are stuck with Quantitative Easing, a very indirect way of stimulating business and reducing unemployment. Providing a real benefit to a business in the form of tax savings makes more sense. Unfortunately, Congress, who has the power to legislate tax policy, is useless so we are left with the Federal Reserve to run the government.
14:18 November 10, 2010 by here for the summer
Very good . It is simple . Whatever you subsidize you get more of . Whatever you tax you get less of. Always made me wonder about employment taxes .
14:54 November 10, 2010 by skatty
I think to consider "benefit" and "real job" is better to star with "Nobel Prize in Economics" itself, which is actually not a "real" prize established by the will of A. Nobel and Swedish central bank created it!
15:04 November 10, 2010 by xenyasai
Go ahead Sweden, start a trial beginning of 2011 to the end of 20013. Three years and see how effective it is. Just within two years they should be able to see the effects of it.

I just got this impression that it is one of those things that seems to work perfect in theory, but in reality it can either be incredibly effective or very disastrous.

What is needed here, like others have also written here, is to find out the cause of why so many are unemployed. When they find cause and effect, then they know where the problem is and should be able to find a solution for it.
16:12 November 10, 2010 by zircon
Economics has nothing to do with emotional rationality. Just simple logic.
22:02 November 10, 2010 by mikewhite
Apart from Mr Spammer (come on Moderators, kill his account !)

half of the posts here are merely questioning the validity of Economics as a subject for study or as a Nobel award.

I agree with the post about a pilot scheme; too often these ideas springing from "think-tanks" or political dogma are blindly implemented by newly-elected governments and then adhered to, regardless, in a M Thatcher "no U-turn" state of mind.
15:48 November 11, 2010 by calebian22
The problem with economics is that it trys to take something logical like mathematics and tie it to something illogical like the decisions made by companies, consumers and governments. Economics is not flawed, people and their habits and decisions are though.
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