By Rachael DeVeau
This agent-based simulation model was created to find the optimum level of unemployment insurance and its duration by utilizing search theory to ensure a more efficient society with a lower unemployment rate. The model consists of applicants (the unemployed) and employers meeting randomly each time period. Optimum matches occur with the correct skill level and when no superior match can be found in the next time period. The productivity level is measured for each match and the closer a match is to the optimum, the more productive the match. Unemployment insurance/benefit is utilized to enable the highest level of societal productivity possible to ensure a thriving economy.
There are an equal number of employers and applicants. Each applicant and employer are randomly selected during each time period to see if the applicant and employer will match. The matching processes is based on the applicant having 1-100 in five different qualities. Each employer is looking for one specific quality. The benefit refers to the compensation that the employer will receive for unemployment. If the benefit is too high, the applicant will not match with an employer because the benefit outweighs the matching. Once an applicant and employer have matched, both are taken out of the pool. The number of simulations refers to the amount of times this program will run from start to finish.