Students will investigate unemployment trends related to the COVID-19 pandemic. After reading about public policy reactions to economic slowing, students will describe how people respond predictably to incentives. Students will determine the impact of public policy on personal incentives and take a position on a public policy proposal.

• Students will be able to describe how people respond to incentives.
• Students will be able to explain how public policy affects the incentive structure of the economy.

None

• Students will view the graph of unemployment and COVID-19 cases
  • Students will identify two trends in the graphs.
  • Students will attempt to explain the trends.
• Students and the teacher will discuss the graph using guiding questions:
  • What was the trend in COVID-19 cases?
  • What was the trend in unemployment?
  • Why might unemployment have continued to rise despite falling COVID-19 cases?
  • Why might some employees not want to return to work after initial COVID-19 related shutdowns and layoffs?
• Segue into incentives and disincentives for working.

Vocabulary preview

• Split class into two teams and have the teams choose captains.
• Read the instructions as provided on the vocabulary preview worksheet.
• You may want to offer some incentive or prize for the winning team. It reinforces the vocabulary. If you have a points‐​based system, these offer a proxy for financial incentives.
• You will read each of the following examples. Each team will decide if the example creates an incentive to work or a disincentive to work. Only the captain of each team can answer the question. The team that can answer the question correctly and first will win a point. The team with the most points at the end will win the game.
  • A federal government loan from the Paycheck Protection Program allows a spa owner in Washington State to rehire employees that lost their jobs when COVID-19 closures closed the spas (incentive). (Economics in One Virus, p. 211)
  • States waive job‐​search requirements for unemployment benefits (disincentive). (Economics in One Virus, p. 212)
  • States expand eligibility for unemployment to self‐​employed workers (disincentive). (Economics in One Virus, p. 212)
  • Congress adds $600 per week to state unemployment benefits for up to four months (disincentive). (Economics in One Virus, p. 212)
  • Most of the available jobs are in essential industries with higher risks of possible COVID19 transmission (disincentive). (Economics in One Virus, p. 212)
  • Employers are required to save jobs to have loans forgiven. (Economics in One Virus, pp. 213–214) (There should be some confusion about this one. Pretend you have lost the key and let students argue about whether this is an incentive for employees or if it will change the behavior of the employers and make them offer higher wages or extra benefits.)
  • Additional unemployment benefits are set to expire next month. (Economics in One Virus, p. 217) (Hopefully there is more argumentation and confusion about this one. If there is not, just question each side. Regardless of what the students offer, ask if their responses speak to the present or to the future. Is it an incentive to work right now or a month from now? If students have a project due next month, are they going to work on it now or next month?)
• Pretend to end the game prematurely over the confusion of the last two questions.

Introducing and practicing with time inconsistency

• Have students read the definition of time inconsistency.
• Have students work in pairs to identify the short‐ and long‐​term incentives associated with the examples from the game.
• Have the pairs report findings for students to determine correct answers.
• Paycheck Protection Program example
  • Short term: hire all workers back ASAP in order to reopen
  • Long term: keep people employed and grow business to pay back loan
• Job‐​search requirements
  • Short term: do not look for a job
  • Long term: start looking when requirement is enforced again
• Expanded eligibility
  • Short term: close small business
  • Long term: reopen business when requirement is reinforced,
• Extra benefits
  • Short term: get laid off or find way to collect unemployment
  • Long term: return to work when extra benefits expire
• Available jobs are in essential industries
  • Short term: remain on unemployment while case transmission is high
  • Long term: return to work when it is safer to do so
• Hire workers back in a timely manner to get loans forgiven
  • Short term: hire as many workers back as possible ASAP
  • Long term: save layoffs for after loan period has expired
• Additional benefits set to expire
  • Short term: wait to look for a job and get the extra benefits while they are available
  • Long term: get back to work when benefits are gone

Incentive excerpts

• Split the class into six groups.
• Have each group read one excerpt and prepare to report the following:
  • Describe how people were responding predictably to incentives.
  • Come up with a policy that would lead to a better social outcome.

Liability debate excerpts/​check for understanding

• Have students read excerpts for or against liability limits.
• Have students answer: Should companies be held liable if their employees or customers get sick at their business?
  • Students may answer this either way as long as they provide evidence from the text and use two vocabulary words.
  • A five‐​point sample rubric is below.
    • 1 point if the answer takes a side
    • 1 point if the answer effectively defends the position with reasoning
    • 1 point if the answer effectively references the text
    • 1 point for each of two vocabulary words
  • If you have time in your classroom, this is also a good opportunity for a civil dialogue.