2. Some social insurance programs compensate workers who are unable to work because of a temporary work injury, a permanent disability, or a layoff. Workers' compensation insurance replaces most of the earnings lost when workers are hurt on the job, and public or private disability programs do the same for workers who become physically or emotionally unable to work for other reasons. Unemployment compensation is paid to those who have lost a job and have not been able to find another. It is generally the case that these income replacement programs share a common characteristic: they pay benefits to those who are not working. In this exercise you will examine the consequences of paying benefits to those who are not working a. Suppose that a workers' compensation program is structured so that after an injury, workers receive their pre-injury earnings for as long as they are off work. Once they work even one hour, they are no longer considered to be injured and cannot receive benefits. Use the model of leisure-consumption choice to illustrate how this program affects the budget constraint for a typical worker with $0 in non- labor income who works h* > 0 hours and earns E*. Show case (1) the budget constraint and consumption-leisure choice without and injury and case (2) the budget constraint and consumption-leisure choice with an injury. Carefully label your diagram and explain. b. If a worker is injured and receiving a benefit, will he ever choose to go back to work if he can earn his original wage? What is the impact on the worker's reservation wage as a result of the workers' compensation policy? Explain and show in your diagram in part a. c. Propose an income replacement policy that would give injured workers a minimal loss of utility, while still providing an incentive to go back to work. For simplicity, use a similar policy to that in a, such that the benefits disappear upon return to work. Explain and show this policy on your diagram in a