The presentation will be about the case study below. You need to do research not only the case study below but other resources.

10-15 minutes presentation if alone, 20 minutes if in a group. Presentation slides are required

Each presentation is based on a case study from the textbook. All case studies are related to current macroeconomic issues or concerns. It is highly recommended to read other articles on the subject to receive a higher grade.

You can include a short video (less than 2 minutes) to explain or illustrate key concepts.

Do not forget to include in your PowerPoint presentation:

a. A title slide (case study’s title, students’ name, course number)

b. Definitions and/or explanations of concepts, theories or models.

c .A reference slide (using APA format).

This is the Case Study>>

The Increase in U.S. Long-Term Unemployment and the Debate over Unemployment InsuranecI n 2008 and 2009, as the U.S. economy experienced a deep recession, the labor market demonstrated a new and striking phenomenon: a large upward spike in the duration of unemployment. Figure 7-4 shows the median duration of unemployment for jobless workers from 1967 to 2017. Recessions are indicated by shaded areas. The figure shows that the duration of unemployment typically rises during recessions. The huge increase during the recession of 2008–2009, however, is without precedent in modern history.

a.FIGURE 7-4 The Median Duration of Unemployment The median duration of unemployment typically rises during recessions, shown as the shaded areas here, but its spike upward during the recession of 2008–2009 was unprecedented.Data from: Bureau of Labor Statistics.What explains this phenomenon? Economists fall into two camps.Some economists believe that the increase in long-term unemployment is a result of government policies. In February 2009, when the depth of the recession was apparent, Congress extended the eligibility for unemployment insurance from the normal 26 weeks to 99 weeks, and it did not allow this program of extended benefits to expire until January 2014. Extending unemployment-insurance benefits is typical during recessions because jobs are harder to find, but the extension to nearly two years was extraordinary.Economist Robert Barro wrote an article in the August 30, 2010, issue of the Wall Street Journal titled “The Folly of Subsidizing Unemployment.” According to Barro, “the dramatic expansion of unemployment insurance eligibility to 99 weeks is almost surely the culprit” responsible for the rise in long-term unemployment. He writes:

Generous unemployment insurance programs have been found to raise unemployment in many Western European countries in which unemployment rates have been far higher than the current U.S. rate. In Europe, the influence has worked particularly through increases in long-term unemployment.

Barro concludes that the “reckless expansion of unemployment-insurance coverage to 99 weeks was unwise economically and politically.”Other economists, however, are skeptical that these government policies are to blame. In their view, the increase in eligibility for unemployment insurance was a reasonable and compassionate response to a historically deep downturn and weak labor market.Here is economist Paul Krugman, writing in a July 4, 2010, New York Times article titled “Punishing the Jobless”:

Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits aren’t quite as desperate as workers without benefits, and are likely to be slightly more choosy about accepting new jobs. The operative word here is “slightly”: recent economic research suggests that the effect of unemployment benefits on worker behavior is much weaker than was previously believed. Still, it’s a real effect when the economy is doing well.But it’s an effect that is completely irrelevant to our current situation. When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn’t booming—there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work—but they can’t take jobs that aren’t there.Wait: there’s more. One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending.

Barro and Krugman, both prominent economists, have opposite views about this policy debate. The cause of the spike in U.S. long-term unemployment remains an open question.1 attachmentsSlide 1 of 1

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30 Duration of unemployment (weeks) 25 20 Recession 15 Median unemployment duration 10 5 0 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 Year Mankiw, Macroeconomics, 10e, © 2019 Worth Publishers
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