Hand outs and help ups

With unemployment already rising at an alarming rate and job prospects looking awful for the New Year and beyond, the thorny question of welfare assistance for those out of work becomes more salient by the week.

The government has announced plans for what they believe are radical welfare reforms - designed to provide a carrot and a stick to nudge the economically inactive back into the labour market. It is one thing having the motivation and the skills needed to find fresh employment in a weakening labour market, it is another to find the work that suits you best in a part of the world where you want to live. Keep in mind that - despite the recession - there are still over 600,000 unfilled job vacancies in the UK economy and many of these have been vacant for a lengthy period of time.

Tim Harford produced a timely piece on the costs and benefits of unemployment benefits in his piece for the Financial Times last week. It is a good one to read because it brings into play concepts such as moral hazard and the social consequences of people having sufficient financial resources to spend time looking for the job that makes the most of their experience and abilities.