ECO360 Homework #5.docx - Justin Cambra ECO360 Homework#5...

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Justin Cambra ECO360 September 21, 2017 Homework #5: pg 209-210 #4,9 4. 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 it’s plausible that the legislation would not affect the rate of job finding? Why or why not? o The formula of the natural rate of unemployment is U/L = 1 / 1+ (f/s) . If the value of s decrease but the value of f is unaffected, the natural rate of unemployment will fall. In regards the legislation affecting the job finding rate, I don’t think it will since firms will
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