The Efficient Planner (aka, Social Planner) has determined allocations for the economy. All of a sudden, the fiscal authority (e.g., Congress) introduces (for political reasons) positive unemployment benefits b ^ue > 0

Starting from the efficient labor-force participation function in the diagram, does the labor-force participation function shift upon the introduction of positive unemployment benefits? If so, does it shift inwards or outwards? If not, why not? Briefly explain.

e OEFF EFF Efficient labor-force participation (aka "labor supply") Assignment 5 Efficient job-creation (aka "labor demand") n