Consider a social insurance program, such as unemployment insurance, that is financed by a payroll tax and

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Consider a social insurance program, such as unemployment insurance, that is financed by a payroll tax and for which only working individuals are eligible for benefits. Now suppose policy makers decide to change the program so that all individuals become eligible. For example, suppose that the unemployment insurance rules are changed so that all individuals, regardless of their work history, are now eligible. In light of the empirical studies by Gruber and Krueger (1991) and Anderson and Meyer (2000) discussed in the text, what do you predict would happen to the pre-tax wages of workers? What would happen to the deadweight losses from the program?
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