Question

I need your answer for this question.Br//Ha

This question is about unemployment insurance schemes and active labour market programs.

a) Use any model of the equilibrium rate of unemployment and discuss how a more generous unemployment benefit scheme is likely to affect wages. Explain through which channels these effects work in the model.

b) Discuss the pros and cons with an unemployment benefit design where the generosity of the benefits falls with the unemployment spell compared to one where it does not.

c) Consider the active labour market program of ‘wage subsidies’ to firms. How would we expect such wage subsidies to affect unemployment from a theoretical point of view? Explain through which channels these effects work.

d) Discuss the displacement effects that are associated with ‘wage subsidies’ to firms.

Answer 1

a.The theoy of labour market pridict that more unemployment put more pressure on wages. thus diminishing the profitability of employment labour and making worse unemployment.

b:- it is well know that unemployment raise unemployment duration

pros:- unemployment benefits help the family in bad condition stay with them.

cons- decrease self esteem in socity as well as in family.

c:- such a Wage subsidies affect the unemployment because this type of subsidies stop the humen being for not doing hard work which lead to umemployementand make them lazy,careless etc.

d:-effect associated with wage subsidies to firm are making mote and more unemployment