Question
Use the one-sided search model to analyze the impact of Covid-19 on labor market. Particularly, consider the following two changes: 1.Covid-19 affects the economy by
Use the one-sided search model to analyze the impact of Covid-19 on labor market. Particularly, consider the following two changes:
1.Covid-19 affects the economy by forcing some small business to go bankruptcy. As a result, the job separation rate s increases.
2. In addition, the federal government provides Canada Emergency Response Benet (CERB) to those who recently stop working (unemployed) due to Covid-19.
What is the implication on unemployment? Answer with two figures, one illustrating the determination of reservation wage and one determining the unemployment rate. Explain the intuition.
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