Economics 480
Summer 1996
D. Maki
                     FINAL EXAMINATION
                              
This examination consists of evaluation of two fictitious
policy proposals. For each of these, provide two arguments
regarding the proposed policy, one in favour of the policy,
and the other against.  Clearly label which argument is
which.  Both arguments should refer to relevant theory and
stylized empirical evidence (if appropriate).

Question 1:  It is proposed to change the Unemployment
Insurance system in three ways:
(1) in any given month of the year, benefits will only be
payable to persons who worked in covered employment (and
made contributions into the UI fund) in that same month in
the previous year.
(2) persons aged 65 and over will be covered under UI only
if they have never drawn retirement benefits under CPP/QPP
(currently persons over the age of 70 are not covered, and
persons between 65 and 70 can be covered even if they have
drawn CPP/QPP retirement benefits).
(3) for legally married couples, the spouse with the lower
taxable earned income in the previous year will not be
eligible for UI benefits this year.

Question 2:  As a sort of "affirmative action" program for
women, youth and minorities, the following three policies
are proposed:
(1) any identifiable group (women, youth and minorities)
which has an unemployment rate greater than the average
unemployment rate for the economy in any year will be
subject to a minimum wage which is 85% of the regular
minimum wage for the following year.
(2) unions can be declared bargaining agents for any group
of workers which is more than 50% women, youth and
minorities if 35% or more of the workers support the union
(requires majority support for other groups of workers).
(3) government sponsored training programs will only accept
women, youth and minorities.