Ludwig von Mises' thoughts on this: Quote: |
An alternative way in which the government may coerce unemployment is to subsidize that unemployment by paying workers to the extent that they are unemployed. This can occur either as direct government payments to the unemployed (often tax-exempt and thereby higher in after-tax terms) or as welfare payments. In either case, the net psychic return from employment over leisure is sharply reduced by such a subsidy, and the incentive to accept the proffered market wage is reduced by the same extent. Mises perceptively refers to such unemployment as "institutional" unemployment.
| Source: The Misesian Case against Keynes - Hans-Hermann Hoppe - Mises Institute
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