Labor Economics 5th Edition by George Borjas

Exercise 8

Suppose the current UI system pays $500 per week for up to 15 weeks. The government considers changing to a UI system that requires someone to be unemployed for five weeks before receiving any benefits. After five weeks, the person receives a lump-sum payment of $2,500. He then receives no benefits for another five weeks. If he is still unemployed then, he receives a second lump-sum payment of $2,500. He again receives no benefits for another five weeks. If he is still unemployed then, he receives a third and final lump-sum payment of $2,500. Provide a graph similar to Figure 12-11 showing how the probability of finding a job over time is likely to be different under the status quo and the proposed scheme.
Reference Figure 12-11