Unemployment Benefits

Use the following benefits calculator to answer the following questions:

https://www.mass.gov/info-details/how-your-unemployment-benefits-are-determined

1. Assume 50 working weeks a year if someone earns $75,000 a year ($18,750 a quarter) what is his/her replacement rate (i.e. the ratio of unemployment benefits to weekly earning) (1 pt)

2. Assume 50 working weeks a year if someone earns $50,000 a year what is his/her replacement rate (.5 pt)

3. Assume 50 working weeks a year if someone earns $25,000 a year what is his/her replacement rate (.5 pt)

4. Draw the weekly budget constraint for a worker earning $25,000 a year ($10 an hour) who is eligible for unemployment benefits upon losing their job. Assume no non labor income that they were working 50 hours of time a week/ 50 weeks a year, and that they have a time endowment of 80 hours a week. Add an indifference curve such that they are better off working than receiving unemployment benefits. (2.5 pts)

5. Now show on the same graph what happens once a $300 per week supplement to unemployment benefit is added as a response to the Covid pandemic. What should happen to labor supply? (1.5 pts)

Now read the following NY Times article

https://www.nytimes.com/2021/08/20/business/economy/unemployment-benefits-economy-states.html

6. What is the natural experiment that allowed researchers to study the impact of employment benefits on labor supply? Be sure to state who/what is in the treatment and control groups. (2 pts)

7. Using the data from the following Twitter link https://twitter.com/JedKolko/status/1427703384828637192 (This is first time I have every included Twitter in an assignment.) What was the impact of reducing unemployment benefits on the unemployment rate? Show your work/I am looking for a number. (1 pt)

8. Using the data from the Twitter link what was the impact of reducing unemployment benefits on the employment rate? Show your work/I am looking for a number. (1 pt)