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Assume the economy is in the steady state. Now imagine that the government introduces a fee that each firm has to pay if it wants
Assume the economy is in the steady state. Now imagine that the government introduces a fee that each firm has to pay if it wants to lay off a worker. This decreases the willingness of firms to lay off workers, and so the separation rate decreases. What happens to the steady state level of unemployment? Provide economic intuit
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