Unemployment benefits reduce job search pressure, business cycle impact minimal.
The study looked at how long people stay unemployed, based on how long they receive benefits and the state of the economy. They used data from Spanish men between 1987-1994. Results showed that getting unemployment benefits makes it less likely for someone to find a job quickly. For example, after 3 months, those without benefits are twice as likely to still be unemployed. Also, when the economy is doing well, people are more likely to find a job sooner. But the effect of benefits on unemployment duration is bigger than the effect of the economy.