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ps3 - experience or low experience Low experience employers...

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BUEC 280: Assignment #3 Prof. Simon Woodcock Spring 2007 Due: Tuesday, Feb 13 in lecture 1. DH, Ch. 6, Exercise 1 (p. 177) 2. DH, Ch. 6, Exercise 8 (p. 178) 3. ESC, Ch. 14, Problem 2 (p. 518) For convenience, I reproduce this question here: Suppose that initially the Ontario economy is in equilibrium with no unemployment: L S = -1 000 000 + 200W and L D = 19 000 000 – 300W, where W = annual wages and L = number of workers. Then structural unemployment arises because the demand for labour falls in Ontario but wages there are inflexible downward and no one moves out of province. If labour demand falls to L D = 18 000 000 – 300W, how many workers will be unemployed in Ontario? What will be its unemployment rate? 4. [Based on a question from a past midterm exam] The Canadian government is considering a change to the way the Employment Insurance (EI) program is funded. Under the new system, employers will be classified as one of two types: high
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Unformatted text preview: experience, or low experience. Low experience employers are defined as businesses who laid off fewer than L workers in the previous calendar year. High experience employers are those who laid off more than L workers in the previous calendar year. Low experience employers will pay a lower EI tax than the current amount. High experience employers will pay a higher tax. A worker is defined as being laid off if they lose their job through no fault of their own. a. What type of employers do you expect to be classified as high experience? Low experience? Explain. b. Will this policy change affect frictional unemployment? Explain. c. Will this policy change affect structural unemployment? Explain. d. Will this policy change affect seasonal unemployment? Explain. e. Will this policy change affect cyclical unemployment? Explain....
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