Lower unemployment benefits lead to lower unemployment duration. This is so because when the living conditions of the unemployed are comfortable, they do not have the incentive to look for jobs actively. Because of this, countries that offer lower unemployment benefits have lower unemployment rates. False. Unemployment is only determined by inflation (i.e. through the Phillips curve) and benefits do not affect inflation. Correct. Indeed benefits discourage search effort and in countries with low benefits unemployment is much lower. False. Though high benefits discourage search effort, many governments that pay high benefits run complex unemployment insurance programs, which include training unemployed workers and advising them on where to direct their search activity. Thus, it is not true that unemployment rates are lower where governments pay less generous benefits. False. Search effort has nothing to do with the level of benefits.

Lower unemployment benefits lead to lower unemployment duration. This is so because when the living conditions of the unemployed are comfortable, they do not have the incentive to look for jobs actively. Because of this, countries that offer lower unemployment benefits have lower unemployment rates. False. Unemployment is only determined by inflation (i.e. through the Phillips curve) and benefits do not affect inflation. Correct. Indeed benefits discourage search effort and in countries with low benefits unemployment is much lower. False. Though high benefits discourage search effort, many governments that pay high benefits run complex unemployment insurance programs, which include training unemployed workers and advising them on where to direct their search activity. Thus, it is not true that unemployment rates are lower where governments pay less generous benefits. False. Search effort has nothing to do with the level of benefits.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 7P

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