In the one-sided search model, the welfare of an unemployed worker
A)is independent of employment insurance benefits.
B)is irrelevant.
C)decreases as market wages increase.
D)increases with the size of the employment insurance benefit.
E)depends only on government intervention in labour markets.

Question

Quizplus · Accepted Answer

In the one-sided search model, the welfare of an unemployed worker increases with the size of the employment insurance benefit. This is because the larger the benefit, the more income support the worker has while searching for a job, reducing the cost of being unemployed.

In the One-Sided Search Model, the Welfare of an Unemployed