Neoclassical economists, like Casey Mulligan, believe massive unemployment is caused by what they consider to be overly generous benefits to the poor.
Payments to the unemployed are compassionate, and maybe even the best government reaction to a deep recession. But previous economic research has shown that this compassion has a cost: programs like these make it more difficult for employers to fill their job openings. It is no surprise that adopting a European safety net is giving us a European unemployment problem.
Their view is that, if the poor were more truly desperate—if they had lower unemployment benefits, less mortgage relief, and so on—they’d take any jobs available. And, voilá, the problem of unemployment would be solved!
Apparently, the ongoing crises of capitalism have not changed neoclassicals’ dogma one bit. They blame the victims (along with “compassionate” but misguided and unwarranted government interventions into markets) for the slow pace of economic recovery.
Their solution, of course, follows from their diagnosis: take away their benefits and screw the poor even more.
occasional links & commentary 
I don’t think the answer is so simple to solve the problem of increasing unemployment. This is a capitalist’s view point to save capitalism. Unemployment is caused during boom periods by monopolistic competition by a elite class of people holding privileges through legislation of limited liability companies, trademarks, patents, trade unions etc. Progress in technology and science is equally responsible for unemployment. Capitalists prefer to invest in machines in stead of in manpower to save and also increase the bottom line. During recessionary periods also capitalists remove the employees to ensure the expected bottom line. If that is not possible, they close the production units to save themselves.
Real solution lies in practicing true free market competition after repealing all the laws that ensure priviliges tothe elite class. Let each able bodied person start his own enterprise by seeking interest-free interest finance from the state and allowing the omnipotent state to ensure working of free competition in the markets. Unemployment as well as poverty will vanish permanently from the world economies.
[…] The economists who wrote the IMF position paper use the same neoclassical model as Robert Shimer, Casey Mulligan, and so many others. And always with the same results. Unemployment is higher and growth is lower […]
[…] how they think about solutions to the current crises (e.g., in the cases of Robert Shimer and Casey Mulligan), and how they analyze the causes of the crisis (as Raghuram Rajan has done). Now, Rajan’s […]