Abstract
While there is a vast literature on the effect of unemployment insurance on unemployment duration, in almost all of these studies the replacement ratio is the key explanatory variable. Does not contest the almost universal findings that the higher the ratio of unemployment income to that of previous earnings, the longer is unemployment duration, but finds that when pre‐unemployment income itself is considered, duration is positively related to that income. Supports the positive view of the merits of unemployment insurance. While past studies emphasize the leisure aspect, unemployment insurance incorporates the ability to improve search through the use of unemployment insurance funds. This use of funds is particularly applicable to high income recipients.
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