You are hired by the presidential administration toreview the UI program, which currently replacesapproximately 45% of a worker's wages for 26weeks after she loses her job. Consider twoalternative reforms of the current Ul system. Thefirst is to experience-rate firms fully, so that thetaxes firms pay are set exactly equal to the benefitstheir workers receive (benefits remain at 45% ofwages). The second is a system of individual fullexperience rating-the government lendsindividuals 45% of their wages while unemployed,but the individuals have to pay this back when theyget new jobs.|a. Contrast the effects of these alternative policieson unemployment durations and the likelihood ofworker layoffs.b. What are the consumption-smoothingproperties of each alternative policy?

layoff refers to a temporary or permanent termination of a work contract by an employee because of…

Answered: a. Contrast the effects of these…

a. Contrast the effects of these alternative policies on unemployment durations and the likelihood of worker layoffs. b. What are the consumption-smoothing properties of each alternative policy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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