Recent research shows that unemployment insurance benefits are more likely to lower the likelihood of self -employment.

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Not only does the greater benefits of unemployment lower the potential for the unemployed to become self -employed, but it also prolongs the time before changing personal employment, e.g. with new research published in Special Issue Newspaper.

Author Wenjian Xu, a financial aid specialist at Shanghai Jiao Tong University, used information from the U.S. Department of Labor for each state on weekly UI benefits, and researched the benefits. the state labor department will be aware of policy details regarding the impact of starting a new business on UI. fair enough.

Research has also shown that the negative effects of UI benefits – more than the positive benefits – are seen in the creation of non -integrated businesses. “This result was a little surprising at first glance, because we thought the high benefits of not working would provide support to those people who are trying to start their own business, leading to self -employment. other professions, ”Xu said. However, most states require that the income of the industry be deducted from unemployment, which does not prevent the creation of new jobs. In addition, he said, high benefits discourage people from moving out of unemployment.

However, the contribution of unincorporated jobs created by the unemployed during the state’s better conditions was found to be better, as measured by income and income. the living life. He believes high benefits will act as a deterrent to the creation of low -income businesses.

The negative effects that Xu saw in his training were most noticeable during the downturn, even though it was the time when professionals believed about earning money in the future. “Because the disincentive effect derived from the reduction demand is particularly relevant to businesses with low incomes, the impact will be greater if more businesses expect to have low incomes,” he said. his place. In fact, Xu’s significant impact was seen as the negative impact of UI’s benefits in transitioning from unemployment to business at the time of release was three times greater than that of the time of no rest.

From a policy perspective, the research suggests removing the cost -cutting requirement from the UI system would reduce negative impacts and encourage unemployed employers to experiment and seek out business, Xu said. and that it can foster a kind of local economy. Personal employment assistance programs (SEAs) intend to implement this incentive, as they allow unemployed people to start businesses without reducing income and they abandon the search requirement. do.

In 2016, only eight states had access to the program, Xu said, and the proportion of unemployed people participating in the program in these states was low due to fixed conditions. To encourage more businesses and create jobs, Xu’s research says investors need to stick to the SEA program and relax conditions to cover the unemployed – even more so. during the holidays, the disincentive effect of UI benefits on employees is greater. It is more difficult to find a new job.

“During the COVID-19 disease, the proportion of new jobs not performed was at the highest level (30%) recorded in 25 years,” Xu said. “Therefore, it becomes very important and critical for investors to eliminate the issues and prepare for that kind of change.”


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More information:
Wenjian Xu, Social and employment insurance: The impact of unemployment benefits on new business creation, Special Issue Newspaper (2022). DOI: 10.1002 / sej.1419

Presented by Strategic Management Society

Directions: New research finds insurance benefits for not working lower likelihood of self-employment (2022, April 1) Retrieved 2 April 2022 from https://phys.org/news/2022-04-higher -unemployment-benefits-likelihood-self- hana.html

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