Problem
1. Suppose the government proposes to increase the level of UI benefits for unemployed workers. Firms now pay efficiency wages to its workers in order to discourage them from shirking. What is the impact of the proposed legislation on the wage and on the unemployment rate for workers in this economy?
2. It is well known that more-educated workers are less likely to be unemployed and have shorter unemployment spells than less-educated workers. Which theory-the job search model, the sectoral shifts hypothesis, implicit contracts, or the efficiency wage model-best explains this empirical correlation?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.