Questions

Define unemployment insurance. How does it work in the United States? How does it work in Mexico? What do the two studies discussed in class today suggest about the effects of employment insurance on incentives?

Define wait unemployment. How is this affected by labor unions and minimum wages? How is the labor market affected if the minimum wage is below the market-clearing wage for unskilled workers?

Define efficiency wages. What are the five reasons that employers may have to pay them. If they exist, how would this promote unemployment greater than than the natural rate? What are the two objections to their existence, as discussed in class?

If wages equal price times workers' marginal revenue, then how will market forces penalize discrimination? How can interventionism protect discriminating employers from paying this penalty? (Here is an article I wrote on the topic.)

Suppose that Congress passes legislation making it more difficult for firms to fire workers. (An example is a law requiring severance pay for fired workers.) If this legislation reduces the rate of job separation without affecting the rate of job finding, how would the natural rate of unemployment change? Do you think that it is plausible that the legislation would not affect the rate of job finding? Why or why not?