Does unemployment insurance affect productivity?

This study provides evidence that more generous unemployment insurance system is associated with faster growth of productivity. The results are consistent with the theory that higher social insurance allows workers to search for more suited jobs and as a result, the worker-job match is more productive (e.g. Acemoglu and Shimer (1999)). This study also discusses reasons why the observed relationship is unlikely to be explained by the fact that richer countries provide more generous unemployment insurance. Our results extend the previous literature on generosity of unemployment insurance and quality of post-unemployment worker-job match by studying the effect on aggregate productivity.