Interesting paper via Marginal Revolution--a scholar found that inefficiencies and delay in states still using COBOL to run their unemployment insurance systems hurt GDP.
I calculate that the failure to invest in updating UI benefit systems in COBOL states caused U.S. real GDP to fall by an extra $181 billion (in 2012 dollars) during this time period. Three primary mechanisms account for the effect I find: COBOL states could be characterized by (1) longer delays in processing claims, (2) longer delays in filing claims, or (3) a larger share of discouraged filers: individuals who do not file because they do not believe that they will be successful in receiving benefits if they file or individuals that believe that the cost to file is too high.
I've good memories of COBOL; for one thing that's how I met my wife, in a COBOL class.
While I understand why states haven't redone their unemployment insurance systems, I won't lose the chance to ponticate on the subject. In an ideal world we'd have a national unemployment insurance program, not 50+ individual state ones. In an ideal world we'd find the resources to redo software systems more often than every 50 years. In an ideal world we wouldn't leave money (GDP) growth on the table.
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