Unemployment insurance schemes face a well-known trade-off between providing income support to those out of work and reducing their incentive to look for work. This trade-off between benefits and incentives is central to the public debate about extending benefit periods during the recent...

This paper discusses the effects of a higher unemployment benefit replacement rate on unemployment durations, employment and earnings. A reform of the Swiss unemployment insurance in July 2003 increased the replacement rate by up to 5.88 ppt for individuals who earned between 3,536 and 4,340 CHF...