Discussion
No, I do not support the idea of unemployment benefits. This is because it will reduce the economy’s employment rate since fewer people will have the incentive to work. After all, they can benefit from not working. Also, the rent reservation wage would increase. Reservation wage refers to the minimal pay that an individual can accept for a particular job. When the reservation wage increases, most firms may close because it becomes expensive to run the organization. Lastly, the efficiency wage will also rise. Efficiency wage refers to salaries that are above the normal market wage. When the efficiency wage increases, a firm’s employment rate will decline because the firm will have an increased expenditure.