Case Study - North Carolina's Unemployment Rate

Case Study: North Carolina's Unemployment Rate

North Carolina's unemployment rate has been higher than the national average since the onset of the Great Recession of 2008. As businesses failed, or at least contracted, many people lost their jobs and started collecting unemployment benefits. The funds North Carolina set aside for such situations ran out and the state borrowed approximately $2.5 billion from the Federal government. In July 2013, to stop the outflow of cash and balance the budget, North Carolina cut the size of the unemployment check and reduced the number of eligible weeks to 26 (half a year).

Since your previous testimony in Raleigh was so successful, the State Legislators would like you to come back and present an economic analysis of the impact of North Carolina's new unemployment benefit policy. The key to this assignment is to focus on economic analysis. The best way to do this is by using the tools of supply and demand to help you. It is recommended that you draw out the supply and demand curves to help you reason through this assignment.

2. In a Microsoft Word document, write a three to four page paper in response to the following as it relates to the case study:

• Start your analysis with the assumption that labor markets are competitive. (In other words, start with the model in equilibrium.) Then, show the old unemployment policy. (You can add unemployment benefits to the market by shifting a curve in the model and see what happens). Next you'll want to see the effects of the new unemployment policy in which the benefits are reduced. (This means another shifting of a curve.) Once you've worked out the effects in your supply and demand model, you should explain the story of what had happened.

3. Your paper should be written in APA style with appropriate references and bibliography.