Suppose the National Assembly passes legislation making it more difficult for firms to fire workers. (An example is a law requiring severance pay for fired workers.). If this legislation reduces the rate of job separation without affecting the rate of job finding, how would the natural rate of unemployment change? Do you think that it is plausible that legislation would not affect the rate of job finding? Why or why not
Suppose the National Assembly passes legislation making it more difficult for firms to fire workers. (An example is a law requiring severance pay for fired workers.). If this legislation reduces the rate of job separation without affecting the rate of job finding, how would the natural rate of unemployment change? Do you think that it is plausible that legislation would not affect the rate of job finding? Why or why not
Chapter7: Unemployment And Inflation
Section: Chapter Questions
Problem 16E
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Suppose the National Assembly passes legislation making it more
difficult for firms to fire workers. (An example is a law requiring
severance pay for fired workers.). If this legislation reduces the rate of
job separation without affecting the rate of job finding, how would the
natural rate of unemployment change? Do you think that it is plausible
that legislation would not affect the rate of job finding? Why or why
not?
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