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Generous unemployment benefits may actually lead to an increase in the measured rate of unemployment since people who are not really looking for jobs may report themselves as unemployed to collect unemployment benefits receiving unemployment benefits reduces the opportunity costs of looking for a better job even after a job offer may have been made O firms are more likely to lay off workers knowing that the consequences of being unemployed are not too severe O unemployment benefits increase the replacement ratio and that, in turn, affects the reservation wage all of the above