Optimal unemployment insurance: Consider the following two proposals toreform unemployment insurance. Explain the arguments for and against eachreform.(a) Te insurance payment would be increased so that it replaced 100% of aworker’s regular labor income for 26 weeks.(b) Each worker would be paid a lump sum equal to 10 weeks of his or herlabor income at the start of the spell of unemployment. Tere would thenbe no other payments.

Optimal unemployment insurance: Consider the following two proposals toreform unemployment insurance. Explain the arguments for and against eachreform.(a) Te insurance payment would be increased so that it replaced 100% of aworker’s regular labor income for 26 weeks.(b) Each worker would be paid a lump sum equal to 10 weeks of his or herlabor income at the start of the spell of unemployment. Tere would thenbe no other payments.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 1P

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Suppose that Unemployment Insurance (UI) benefits are set according to the following rules: (i) minimum weekly earnings in last week of employment of $200.00 is needed to qualify; (ii) the maximum UI weekly benefit is $1000; and (iii) UI benefits are set equal to 50% of the last week’s earnings between the minimum and maximum levels. A. Show the structure of the UI benefit system on a diagram. B. Compute both the UI benefit level and the replacement rate if weekly earnings in the last week of employment is: (i) $100; (ii) $500; and (iii) $3,000.
Unemployment benefits are subject to income taxes. They are not (by default) subject to withholding, or to payroll taxes. Suppose that a particular worker is subject to a payroll tax of 7.65% of her wages; that she pays an average income tax rate of 10%; and that after losing her job, she is eligible to receive 60% of her previous weekly income. (Show Work) (a) What fraction of her take-home paycheck will she receive from unemployment insurance? (b) What effect does the tax treatment of unemployment insurance benefits have on the ability it provides its recipients for smoothing? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose that all social programs simultaneously become more generous. In particular suppose thatthere is an increase in UI benefits of $500, and also an increase in welfare benefits of $500, whichare represented in the two-sided search model as payments to everyone who is not in the labor force.What will be the effects on• the unemployment rate, U ,• the vacancy rate, v,• the labor force, Q,• the number of firms, A,• aggregate output, Y , and• labor market tightness, j ≡ A/Q?
1. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=50·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 2. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=30·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 3. Supose that·Total Factor Productivity increases·Capital depreciates by 10%Everything else equal, what happens to labor demand in the economy?A. It decreases (i.e. shifts to the left of the demand curve)B. It increases (i.e. shifts to the right of the demand curve)C. Not enough information to answer 4. Supose that·Total Factor Productivity decreases by 10%·Capital depreciates by 10%Everything else equal, what happens to labor demand in the economy?A. It decreases (i.e. shifts to the left of the demand curve)B. It increases (i.e. shifts to the right of…
Workers are compensated by firms with benefits in addition to wages and salaries. The most prominent offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid $30 per hour and in addition received health benefits at the rate of $6 per hour. Also suppose that by 2010 workers at that plant were paid $31.50 per hour but received $13.5 in heakth insurance benefits. a. By what precentage did total compensation (wages plus benefits ) change at this plant from 2000 to 2010? Total compensation increased or decreased by________ percent? What was the approximate average annual percentage change in total compensation? b. By what percetage did wages change at this plant from 2000 to 2010? Wages increased or decreased by ______percent? What was the approximate average annual percentage in wages? c. If workers value a dollar of heath benefits as much as they value a dollar of wages, by what total percentage will they feel their incomes have risen over…
Assume you have been laid off from your job and withdrew from the labor market. Youhave zero non-labor income. If you did supply labor to the market, you could earn $7.25per hour. There are 110 non-sleeping hours available during a week.a. Draw the budget constraint and indifference curve that depicts the situationdescribed above.b. Because you were laid-off from your job, you qualify for unemploymentinsurance (UI). In Wisconsin, you could earn $370 per week without working. Ifyou do choose to work, your labor earnings are taxed at 67%. Furthermore, understate law, you could work up to 31 hours during the week and still receive UI.Show how this UI program alters your budget constraint.c. Would the UI program described in part (b) alter your decision to supply labor tothe market? Why or why not?
E1 3. [Employment and Unemployment] Suppose a country has a working-age population of 500people. The demand and supply functions of its labor market are:w=300-0.5L w=60+0.1Lwhere w is the wage, L is the quantity of labor. The labor market has search friction so thatthose that are looking for a job may not immediately find one even when there are openings.Specifically, Assume the number of job matches (i.e. employment) is given by: 0.8L(a) Find the equilibrium wage and the actual number of employed people. Calculate thelabor force participation rate and unemployment rate. (b) The COVID-19 pandemic lowers the labor demand, and the new labor demand becomesw=240-0.5L. Assume that the wage can adjust quickly, find the equilibrium wage and theactual number of employed people during the pandemic. (c) Briefly explain in words, and with a specific example of each, the difference betweenstructural and frictional unemployment.
Consider an individual aged 64 who is eligible to collect full social security (public pension) benefits of $6000 for a year. She has no other income, but can work at a weekly wage rate of $600 for a maximum of 52 weeks. Receipt of benefits from the social security program is retirement-tested. Specif- ically, the individual can earn up to $9000 in annual wage income without a reduction in benefits; how- ever, after $9000 of earnings, benefits are reduced by 50 percent for every dollar earned, until the ben- efits are exhausted. a. Carefully draw and label the budget constraint for this individual. b. Consider an individual whose labour supply decision is such that she receives YA in social security benefits, so that 0 , YA , $6000 (i.e., she receives positive but reduced benefits). On the carefully labelled diagram from part (a), show her labour supply decision. c. “Elimination of the retirement test (i.e., allowing the individual to keep all benefits, irrespective of his or her…
What happens in the basic job search model if the uncertainty concerning the wageoffer is switched off, i.e. there will only be one possible wage offer w0 (Hint: Similar as in thebasic Diamond model) ? Answer this with respect to the job offer acceptance probability, theprobability of moving to work and the unemployment duration? (Labour Economics)
A3 in the McCall partial equilibrium model, if unemployed individual can only live for 10 periods. In each period, she will receive $400 if unemployed. The offered wage is uniformly distributed in the range of [500,1000] 1.what will the reservation wage be in the period 9 if the discount rate is 0.9? 2.what will the reservation wage be in the period 8 if the discount rate is 0.9?
A utilitarian believes that the redistribution ofincome from the rich to the poor is worthwhile aslong asa. the worst-off members of society benefit from it.b. those contributing to the system are in favor of it.c. each person’s income, after taxes and transfers,reflects his marginal product.d. the distortionary effect on work incentives is nottoo large.
Suppose that potential migrants make decisions only based on comparisons of their expected incomes. Now suppose the rural wage is $1 per day. Urban modern sector employment can be obtained with 0.25 probability and pays $3 per day. The urban traditional sector pays $0.40 per day. (a) Using this information, and making assumptions as needed, can you make a prediction about whether there will be any rural-to-urban or urban to rural migration? (b) Explain your reasoning, stating explicitly any simplifying assumptions, and show all work. (c) Consider an approach that calculates an expected income in the urban sector of 0.25(3) + (0.75)(0.40) = 1.05; and note that this exceeds the rural wage of 1—would you predict that there will be rural-to-urban migration? (d) What simplifying assumptions are needed to make this a valid conclusion? (e) Now, what would the urban traditional sector daily income have to be to induce no net rural-urban migration? (f) If wages in all sectors are inflexible,…