Emergency Unemployment Compensation Programs

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Unemployment benefits: government vs. workers A Game-Theoretic Approach Prepared by Daria Bazueva Fall 2016 I. Introduction Imagine, you get up every morning bright and early and start your day with a cup of coffee at your computer desk while job hunting. It is usually followed by filling in spreadsheets to document the search and its results. Add a few phone interviews per month that usually do not result in job offers and a few monthly stops by the local Employment Agency, and you will get a sense of what a regular month of majority of Emergency Unemployment Compensation program participants look like. At least it was so until the program expired at the end of 2013 and Senate has not renewed it. That means no more bi-weekly …show more content…

Thus, the duration of UI benefits in all states was lowered to their initial duration of 26 weeks. This decision was quite controversial. Some economists supported the decision, arguing that the economy has improved since the period of Recession, so the unemployed find new jobs faster than before and they no longer need extra time. Others instead voiced a concern that “without access to benefits unemployed workers will stop searching for jobs and will exit the labor force instead” (M.Hagedorn, I,Manovskii, K.Mitman, p. 3) …show more content…

Most importantly, it does not only affect workers, but also the whole economy, making government worse off by the end of the day. Loss of this source of income will most definitely result in lower economic activity and therefore decreased spendings of this part of population, which furthermore will result in slower economic growth. Lower economic activity of population of size around 1.3 million people will most likely result not only in reduced economic growth, but moreover in less new jobs. According to the findings of report by Economic Policy Institute, “continuing the extensions through 2014 would generate spending that would support 310,000 jobs. If this program is discontinued, the economy will lose these jobs.” (Economic Policy Institution report from November 7, 2013) . Therefore, the overall financial impact on the government would be negative. Overall, more detailed analysis of this policy change shows that there is no absolute winner in the situation and both sides are defeated in some aspects by the situation. This contradiction makes this case more interesting and complex. Thus, I plan on conducting this project in order to complete more profound research on this case by applying a game-theoretic

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