Extending jobless benefits will likely lead to more unemployment.  -- Kelly Evans, WSJournal, 12/9.   [story taken down, no link available]

Contra a WSJ columnist, the stimulative impact of an extension outweighs any negatives.  -- Felix Salmon, Columbia Journalism Review, 12/9.

   WSJournal:  Extended Benefits Come with Baggage.   A likely rise in the U.S. jobless rate is the unfortunate reality of the government's move to fund extended unemployment benefits for another 13 months.  It will be significant, and not huge. A recent study by the Federal Reserve Bank of San Francisco found the unemployment rate at the end of 2009 would have been nearly half a percentage point lower—9.6%, instead of 10%—if jobless benefits hadn't been extended beyond their usual 26 weeks to as much as 99 weeks.

Lately, new applications have trended down - about 431,000 apps were filed during most of November - lowest level in more than 2 years.  Yet that hasn't been accompanied by a similar improvement in the unemployment rate.  It rose to 9.8% in November from a recent low of 9.5% over the summer.  Largely due to the sluggish pace of job creation. 

Extending jobless benefits is likely to worsen that trend for at least several months.  For one, individuals not actively searching for work or willing to take available jobs may claim they are unemployed in order to receive benefits.  It also may "reduce the intensity" with which unemployed people search for work.  Regardless, policy makers are hoping that extending benefits—along with other tax breaks—will generate enough short-term strength in spending and growth to overshadow any rise in the unemployment rate.

    Columbia:  An Extension Will Reduce Unemployment.  Mr. Salmon had previously written that the  federal extended unemployment benefits program (following states' 26 week payout) already, has increased the level of employment by 793,000 jobs. Not to extend the federal benefits would result in 593,000 fewer jobs in a year’s time - 46,000 jobs in Florida;  26,000 jobs in Michigan. 

This isn't intuitive, especially to economist types who think that incentives matter and that, at the margin, paying people to remain unemployed is not going to increase their chances of getting a job.  But the fact is those unemployment benefits are spent which naturally adds economic activity and, in turn, creates employment.  That said, Mr. Salmon acknowledges that paying people to stay unemployed will increase their chances of doing so, although he points to studies that concluded the effect is “relatively modest.”

Another study concludes that extended unemployment insurance should be viewed from a fairness perspective while being an extremely effective stimulus.  Any effect whereby it encourages people to stay unemployed is, in comparison, modest.