Consider the impact of unemployment benefits on the labour market. How is a more generous unemployment benefit likely to affect wage setting, search effort among unemployed job searchers, and the rate of unemployment? What do we know from empirical research about the impact of more generous unemployment benefits on the duration of unemployment? What do we know about the escape rate from unemployment in case of time limited unemployment benefits? How has empirical studies gone about to test the implications of more generous unemployment benefits on the probability of leaving unemployment for a job?