The country of Londonia is concerned about poverty among the unemployed and is considering to reform its unemployment insurance system. Currently, unemployed people receive unemployment benefits for 26 weeks, and they are paid 150 per week. Londonia wants to increase the duration for people who are 40 years or older to 39 weeks, and it wants to increase the amount for workers whose income was below 15,000 per year before unemployment to 160. (You might find it helpful to create table that summarises the changes for the different groups).

a) Under the current system, explain how the unemployment insurance affects higher and lower income people differently. Whose asking wage is likely to be higher? Whose unemployment duration is likely to be longer? [200 wrds, 10 marks]