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Bernanke: Unemployment Insurance May Encourage People to Stay in Labor Force

Dow Jones Newswires (03/26/12) Kristina Peterson

Federal Reserve chairman Ben Bernanke told attendees at the annual conference of the National Association for Business Economics that unemployment insurance may help encourage workers to stay in the labor force. “I would not attribute the extent of long-term unemployment or the very high level of unemployment to unemployment insurance,” Bernanke said. Lawmakers have debated how long the federal government should provide unemployment insurance to laid-off workers, with some claiming it could lessen unemployed workers’ motivation to find another job.

Bernanke said that the slow rate of wage growth is likely consistent with his view that the high rate of long-term unemployment is due to cyclical factors, rather than structural reasons. He also noted that wages are not pushing up inflation. “Wages themselves are not a major concern for inflation,” he said. “We still need to be concerned about commodity prices and other factors.”