The Safety net and layoff Essay Example | Topics and Well Written Essays - 750 words

The Safety net and layoff - Essay Example Well, there are two economic perspectives on this issue. The first perspective argues that by increasing the support for people without jobs those with low incomes will decrease their incentive to find jobs. Others argue that more generous the government is the more incentive for the unemployment to find jobs. Government has become more generous with social safety net in many ways. A bonus was added to unemployment checks, people were offered subsidies to pay for their health insurance, food-stamp benefit levels were increased, and were available in situations in which they were formerly unavailable and states were granted waivers from program work requirements. This perspective is in line with the Keynesian school of thought which is based on the concept that in order for an economy to grow and be stable, extreme government intervention is required. This will make people have less motivation to find a job, and will shift the aggregate supply of labour to the left as shown in the diagram below. The advantages of unemployment benefits affect everyone. Benefits help individuals and family to have the necessities to live and help them throughout periods of unemployment. The unemployment benefit will result in an increase in consumption and that affect the general economy shifting the AD to the right as shown in the diagram below. The disadvantages of benefits are for business and the society as whole. As unemployment increase, government will need to give more unemployment benefits, and the government get the money for increasing taxes and/or reallocating their spending from one sector to another. Thus businesses and society will not be in favor of the unemployment benefits. While economists seek to find whether or not the government should be generous with social safety net and what is the effect of that on unemployment job seeking they often fail to notice the effect of the safety net on the