Unformatted text preview: V u = 1 + r r & ( r + s ) b + pw r + s + p & d ± (iii) Explain why an unemployed individual will only look for a job if V u ± W u : Suppose b < w & d and show an unemployed worker will actively look for work only if the probability of &nding work is large enough; i.e. when p > ( r + s ) d w & b & d : Explain how job seeker incentives depend on (a) the probability of &nding work p; (b) social security bene&t b; (c) the typical wage o/er w; (d) how long the job is likely to last; (e) outside leisure opportunities d: (iv) Will anybody look for work if bene&t b > w & d ? Think about it - why is the condition in (iii) wrong when b > w & d ? 1...
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This note was uploaded on 12/31/2011 for the course ECON MR 102 taught by Professor Huyduong during the Winter '11 term at RMIT Vietnam.
- Winter '11