When critics of unemployment insurance claim that some of the unemployed are not exerting much effort to find jobs because of the unemployment benefits, they are referring to the moral hazard problem.

Question

Quizplus · Accepted Answer

The moral hazard problem refers to a situation where individuals may engage in riskier behavior or not exert effort to avoid a negative outcome because they are insulated from the consequences, in this case, by receiving unemployment benefits.

When Critics of Unemployment Insurance Claim That Some of the Unemployed