Unemp oyment Unemployment insurance systems provide payments to eligible workers who are laid off from their jobs. Assume the following for all questions in this problem set: E workers in Type A firms face a probability of layoff, pA, that is greater than the probability of layoffs faced by workers in Type B firms, pB. E workers who are laid off receive a benet of v E all workers value the benet equally, conditional on being laid off 1. Suppose that: E The government pays unemployment insurance payments directly to workers E The government funds the system via a payroll tax levied on rms E the tax rate, t, is set so that the total amount of revenue collected by government is equal to the total amount of payments to workers How would you expect this scheme to affect the following outcomes in Type A firms? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to firms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid Suppose that: the government pays unemployment insurance payments directly to workers the government funds the system via a payroll tax levied on firms the tax rate, t, is set so that the total amount of revenue collected by government is equal to the total amount of payments to workers How would you expect this scheme to affect the following outcomes in Type B firms? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to firms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid Suppose that: E The government requires rms to provide unemployment insurance payments to workers that they lay off How would you expect this scheme to affect the following outcomes in the Type A sector? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to rms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid Suppose that: E government requires rms to provide unemployment insurance payments to workers that they lay off How would you expect this scheme to affect the following outcomes in the Type B sector? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to firms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid