Question

A. What type of unemployment (frictional or structural unemployment) does the policy below target? i. Reducing the generosity of unemployment insurance benefits ii. Implementing government employment agencies to increase accessibility of information about job vacancies iii. Regulating unions to reduce union's impact on wages iv. Increasing public funding to help retrain workers displaced from jobs in declining industries B. Suppose that due to COVID -19, the United States experiences a reduction in productivity - that is an adverse shock to the production function. What happens to the labor demand curve? Briefly explain in words.

Answer 1

Answer to first question provided as per HOMEWORKLIB RULES :

A) Frictional unemployment : Job search unemployment or gap between two jobs .

Structural unemployment : Unemployment due to skill mismatch with technology or demand .

1) Reducing generosity of insurance benefits : Frictional unemployment ( incentive to search job rises )

2) Implementing government employment agencies ..... : Frictional unemployment ( people get to know about vacancies faster )

3) Regulating unions .... : Structural unemployment ( Change in union impact means change in industrial stucture )

4) Increasing public funding ..... : Structural unemployment ( unemployment due to change in industrial stucture )