The impact of unemployment insurance generosity on the duration of unemployment and on the quality of the job found.

Summary The primary objective of unemployment insurance is to provide a replacement income to people who are involuntarily unemployed. Beyond this primary role, the question arises as to the effectiveness of this system. In theory, more generous unemployment benefits slow down the exit from unemployment but are also likely to improve the quality of the job found. This study empirically measures the impact of an increase in the maximum duration of unemployment benefits in France between 2000 and 2002. When the duration of unemployment benefits is increased from 7 to 15 months, the rate of return to employment decreases by 28 percent (i.e., an increase in the duration of unemployment of about two and a half months), while the stability of the job found and the wages received are not significantly improved.