Suppose that Congress passes legislation making it more difficult for firms to

fire workers. One example might be a law requiring severance pay for fired

workers. The goal of this legislation is to reduce the rate of job separation

without affecting the rate of job finding. Use this information to answer the

following two questions. $($Assume the size of the labor force remains constant.$)$

$$ If this legislation reduces the rate of job separation $($s$)$ without affecting

the rate of job finding $($f$),$ how would the natural rate of unemployment

change?

$$ The rate of job separation will decrease, and the average will increase.