Introduction / Context:
Unemployment allowances are debated worldwide. A strong argument can come from either efficiency/equity benefits or from potential moral hazard concerns. The question asks which of the two given arguments are strong.
Given Data / Assumptions:
- I claims cash support helps job search and can seed self-employment.
- II warns of reduced job-seeking effort due to guaranteed income.
- We are not told about design safeguards (duration caps, conditionality), so both perspectives are evaluated in principle.
Concept / Approach:
- Income support can stabilize households and enable search time or microenterprise experiments.
- Poorly designed allowances can indeed reduce work incentives (classical moral hazard).
- In argument-strength questions, two opposing positions may both be strong if each is relevant and logically sound.
Step-by-Step Solution:
Argument I: Relevant and plausible—cash support can improve matching and entrepreneurship readiness.Argument II: Also relevant—without design features, allowances may blunt incentives to accept available work.
Verification / Alternative check:
Policy practice balances these by adding conditionality, time limits, or training linkages to preserve incentives while offering support.
Why Other Options Are Wrong:
Only I or Only II: Ignores the validity of the other side.Either I or II: Suggests exclusivity; both stand as strong.Neither: Both are clearly relevant.
Common Pitfalls:
Equating “strong” with one’s preferred ideology; both efficiency and incentive arguments matter.
Final Answer:
Both I and II are strong
Discussion & Comments