Does Recessions Eliminate Incentive Effects?
Is this argument valid? No, for three reasons.
First of all, the official number of job openings arguably underestimates the true number of job openings, as not all businesses officially advertise them.
Secondly, even if the official number of job openings was all there was, that would still mean that there is a lot of room for a decline in unemployment.
And thirdly, and most importantly, if the unemployed are more eager to get back to work as soon as possible, this will mean that wage demands will fall, making it more profitable for employers to create more job openings.
This doesn't mean that in the absence of unemployment benefits, unemployment would disappear. But it does mean that more generous unemployment benefits increases unemployment and less generous unemployment benefits reduces unemployment.
The Swedish experience during its latest recession illustrates this.