The Role of Unemployment as an Automatic Stabilizer During a Recession

Source: Wayne Vroman, U.S. Department of Labor, ETAOP 2010-10, November 16, 2010

From the press release:
The Unemployment Insurance (UI) system helps the population most directly affected by recessions–those who have lost jobs through no fault of their own. This focus makes it one of the most effective targeted tools for maintaining American families’ purchasing power and keeping the economy on track during an economic downturn. Unemployment creates a snowball effect where people who have lost their job reduce their spending causing businesses to lose money and others to lose their jobs. Unemployment insurance acts to reduce this effect by helping the unemployed to continue to purchase vital goods and services for their family.
Unemployment Insurance Benefits and Family Income of the Unemployed
Source: Congressional Budget Office, November 17, 2010
New CBO & DOL Studies Underscore Need For Full‐Year Renewal Of Unemployment Insurance
Source: National Employment Law Project, Press Release, November 18, 2010

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