In the one-sided search model, an increase in the separation rate
A) reduces the welfare of an employed worker.
B) increases the welfare of an unemployed worker.
C) reduces wages.
D) increases the employment insurance benefit.
E) results in fewer marriages.

Question

Quizplus · Accepted Answer

In the one-sided search model, an increase in the separation rate means there are more job separations, which may lead to higher unemployment and lower job security for employed workers. Therefore, an increase in the separation rate reduces the welfare of an employed worker.

In the One-Sided Search Model, an Increase in the Separation