Question

When are workers more likely to get a job: six weeks before their unemployment benefits run out, or a week before their unemployment benefits run out? Why? Based on your explanation, what recommendations might you make to the government right now with respect to its unemployment policies?

Answer 1

Workers are more likely to get a job 1 week before their unemployment benefits run out because one of the factors on which chances of finding a job depends is the effort from the worker. The higher the effort put in by the worker in finding a job, the higher the chances of actually getting a job. When 6 weeks are left in unemployment benefits, the worker puts in less effort in finding a job as there is less urgency. But when only 1 week is left, the worker puts in higher effort because there is high urgency.

Based on this, we can make the following recommendations to the government-

• Reward those who find jobs quickly- The reward can be in terms of credit points, a small 'early job finder' monetary benefit or higher unemployment benefit in the future.
• Make renewing unemployment benefits tougher- This will increase the urgency.
• Tie effort with benefits.