Mathematical Analysis of Unemployment Benefits

Abstract

During the Great Recession, expenditures on unemployment insurance (UI) benefits increased, and the benefits were extended. This research deals with development of a mathematical model to calculate unemployment benefits. At a conceptual level, unemployment benefits can be considered as directly proportional to salary and the employment period of the worker prior to being laid off. It is also inversely proportional to factors such as other governmental benefits received in that period of unemployment. The approach in this paper presents the need to calculate the unemployment benefits to keep up with the capricious wages and changing regulations. This analysis will include state and federal government benefits. Each state should be able to adapt the new formula, so it can assess the proper baseline for calculating the unemployment benefits needed for their specific cost of living requirements.