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UGBA+101B+-+Homework+4 - UGBA 101B Homework#4 Due February...

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UGBA 101B Homework #4 Due: February 14, 9:30AM 1. What are two reasons why the reported unemployment rate might under- or overstate the true unemployment rate? One reason is that the unemployment rate may not reflect the employment status of immigrants both legal and illegal. Thus it is difficult to account for such fluctuations in the population. A reason the unemployment rate may understate the true unemployment rate is due to discouraged workers. These workers are measured as unemployed but are to really actively seeking work. 2. What are two policies to reduce frictional unemployment? One policy would be to lower the unemployment insurance, so that people can be more motivated to get a job when they are unemployed. Another policy would to add economic incentives to getting a job within a certain time period. For instance, workers that got a job within 10 weeks of being unemployed are offered a bonus of $500. This way, unemployed people will be motivated to find jobs quickly. 3. What are three costs of unemployment?
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