... unemployment1
Chiu and Karni (1998, p. 807) point out that the intention of UI is to insure against income losses associated with being laid off involuntarily.
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... regions2
In what follows, the termini rich and poor regions are used synonymously with "regions characterised by relatively low/ high unemployment rates", respectively.
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... good3
The consumption good and the produced good need not literally be identical, as long as they are both traded at exogenously fixed prices on world markets, see Wellisch and Wildasin (1996, p. 192).
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... reads4
For the sake of simplicity, the superscript $i$ is omited in this submodel. The results apply to both regions.
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... thus5
Note that from the definitions of $G$ and $\pi$ it is straightforward that $G_w>0$, $G_n>0$, $G_\beta <0$, $G_\tau <0$, $G_{w \beta}=0$, $G_{n \beta}<0$, $G_{n \tau}<0$ and $\pi_n=0$. The sign of $G_{w \tau}$ is negative in general.
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... respectively6
The signs of the derivatives only follow if $x>n$, which is guaranteed by the choice of the parameters made hereafter.
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