Here's a link to the story again:
These are obviously two contrasting views about what happened to North Carolina's labor force, based on seemingly conflicting data sets. In their paper, Hagedorn and his co-authors wrote, "We could not establish the reasons for this discrepancy based on our conversations with the BLS." So it's very possible that the data's just noisy, and it's too soon to draw any broad conclusions from a half year's worth of data in a single state.
This does, however, touch on a long-standing economic discussion about the effect of unemployment insurance. Let's rehash that debate a bit for context.
The view that extended jobless benefits are helpful during a recession. One mainstream view is that cutting unemployment benefits during a recession doesn't actually spur people to find jobs. After all, jobs have been very scarce these past few years. Even today, there are still three workers seeking work for every one job opening. People can't find jobs if there aren't jobs to be found.
That's why many economists think that unemployment insurance isn't really discouraging workers from getting jobs right now. For instance, the University of California, Berkeley's Jesse Rothstein has estimated that the expansion of jobless benefits only added 0.1 to 0.5 percentage points to the unemployment rate in 2010. JPMorgan's Michael Feroli has helpfully rounded up a variety of studies that come to a similar conclusion
Those studies imply that workers won't magically find jobs if their unemployment insurance gets cut. Instead, many workers may stop looking for work — since they no longer have to keep search to qualify for benefits. The BLS numbers on North Carolina seem to support this story.
The view that jobless benefits are causing problems. Hagedorn, however, has dissented from this mainstream view. In October, he released a paper (pdf) with three co-authors suggesting that the expanded unemployment insurance program was actually responsible for much of the rise in joblessness during the Recession. Importantly, that paper doesn't argue that jobless benefits discourage workers from looking for jobs. (They find that this effect is small, just like Rothstein did.) Instead, his model suggested that the unemployment program raised costs for employers, who saw a drop in profits and, in turn, are less likely to offer jobs.
By extension, this paper suggests that cutting unemployment insurance might be a good thing — it would boost incentives for hiring. The Census's establishment survey numbers on North Carolina seem to support this story.
Others remain skeptical of Hagedorn's argument. As Chad Stone of the Center on Budget and Policy Priorities explained in this critique last fall, the paper relies on a very different model of how the U.S. economy acts during the recession — namely, one in which insufficient demand from consumers for goods and services isn't the economy's main problem. Stone argues that this model gets cause and effect backwards: Businesses aren't hiring because there's not enough consumer demand, which is why we had extended jobless benefits. Not the other way around.
