Suppose a country has a 26-week limit on the duration an unemployed person receives unemployment benefits. You collect some data and notice that many workers in their 26th week of unemployment benefits somehow manage to find jobs at a much higher rate than other unemployed workers.

This statistic suggests that unemployment insurance:

• provides an incentive to wait until benefits run out before seriously looking for work or taking a new job.
• should be expanded.
• can be eliminated before the completion of the 26th week.
• is really needed.