The assignment question is below. The assignment must be done in accordance with the Australian Welfare system. I have also attached notes for topics 1-7 which the assignment must be based around/ use these notes to base the assignment.
‘Unemployment benefits serve to subsidise unemployment by lowering the costs of unemployment to unemployed people. Accordingly, a rise in unemployment benefits will increase the level of unemployment ceteris paribus’ Discuss with the aid of diagrams.
2000 words Students must consult and cite at least six scholarly literature sources other than the textbook in this essay.
Textbook used for course:
Friedman, L.S. (2002). The Microeconomics of Public Policy Analysis. Princeton: Princeton University Press.
Hello everyone, I’m sharing an interesting conversation I had with one of your colleagues.
While discussing the assignment question we came to the conclusion that a good approach would be to follow three steps:
1) define the problem of the effect of unemployment benefits on unemployment.
2) Offer a solution such as the EITC we have in the text book.
3) find literature discussing the benefits of unemployment programs that aim to combat the disincentive to work created by unemployment benefits
This is great discussion, let me try to separate issues we are discussing here:
– ceteris paribus means: other conditions remaining the same. This is used in a Partial Analysis. For example, “assuming that interest rates remain the same during the period (ceteris paribus) the rate of house sales will probably increase given the increase in individuals income with the increased growth rate”. It refers more to ‘measurable conditions that we are not considering now’. I would not use this term to define the fact that utility may vary between individuals.
– Utility will differ between different individuals. Some individuals would be willing to pay more for the extra unit of the good and these would be part of the consumer surplus. The market will operate where supply and demand find an equilibrium point.
– Niall, you can probably define two consequences from unemployment benefits: (1) people willing to withdraw from labour market given the opportunity cost (leisure), and (2) individuals remaining longer under unemployment benefits given the disincentive to return to the labour market. The later may involve issues with the labour market while the former addresses more objectively the theory we are studying. Maybe just stick to the first, other wise you end up writing a thesis, like Adam said.
-Different approaches used in different countries is most interesting indeed, Emma, but you have a word limit. Maybe used it in the last part, when you are discussing the results of using a program that creates incentives to return to work.
Now tell me if these comments make sense, there are only so many perspectives the words can reach.
Notes
