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Suppose that all social programs simultaneously become more generous. In particular suppose that there is an increase in UI benefits, and also an increase in
Suppose that all social programs simultaneously become more generous. In particular suppose that there is an increase in UI benefits, and also an increase in welfare benefits, which are represented in the two-sided search model as payments to everyone who is not in the labor force. What will be the effects on the unemployment rate, the vacancy rate, the labor force, the number of firms, the aggregate out-put, and the labor market tightness? Explain your results
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