Competitive markets generally do not provide unemployment insurance because of

Question

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Competitive markets have concerns with moral hazard when it comes to unemployment insurance. The fear is that individuals will become less motivated to find work or accept lower-paying jobs since they know they have a safety net. This could lead to an increase in unemployment and a decrease in productivity. Therefore, in competitive markets, employers and employees are generally left to their own devices to provide for unemployment insurance, without government intervention.

Competitive Markets Generally Do Not Provide Unemployment Insurance Because of