One student of the labor market effects of free trade argues that the government should offer “wage insurance” to workers who lose a job because of free trade.

Under this proposal, the government would replace a substantial portion of lost earnings if, upon reemployment, eligible workers find that their new job pays less than the one they lost. This wage insurance would be available for up to two years after the initial date of job loss.

Would this wage insurance program reduce unemployment? Explain.