2 McCall Search Model with a chance of losing a job Now consider the job search model discussed in class and in section 6.3.5 of Ljungqvist and Sargent in which employed workers face an exogenous probability 5 of being red. 1. 1FWrite a Matlab program to solve the Bellman equation by value function iteration using the following parameters: {5' = 0.9, b = 2, 5 = 0.1, and the wage offer distribution F(w) = U [50, 150] (wage oers are drawn uniformly between 50 and 150). 2. Solve for the reservation wage associated with each value of 5 E {0.0.05,U.1,U.15, ...,U.95, 1}. Create a plot with the probability of being red 5 on the horizontal axis and the corresponding reservation wage on the vertical axis. Note that 5 = 0 corresponds to the problem 1.1 above. Discuss the economics of the relationship between the the probability of being red 5 and the reservation wage i)