Education is not correlated with fertility or labour supply. Remotely it can be a factor sometimes, but not under specific circumstances.
Labour force participation depends on many factors like skill, vacancy, inflation rate, demand and supply of job etc. And hence the accurate state of labour market cannot be determined solely based on labour force participation.
An incentive from the government will definitely increase the demand for job and hence an increase in supply of labour.
In the question all labourers who have worked for at least 10 weeks are eligible for upto 75% of the market earnings for a total of 30 weeks.
- In the second part the government has reduced the benefits to 50% of the market earnings for a total of 20 weeks.
- The aggregate labour supply will change positively under the EI program when moving from part a to part b.
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