Rebollo-Sanz, Yolanda F.Rodríguez-Planas, Núria2025-07-112025-07-112020Journal of Human Resources 55 (1), 119-16310.3368/jhr.55.1.1015.7420R2https://hdl.handle.net/10433/24412We acknowledge financial support from Agencia Estatal de Investigaci´on (Ministerio de Ciencia e Innovación), project PID2019-104452RB-I00, Fondo Europeo de Desarrollo Regional and Consejería de Transformación Económica, Industria, Conocimiento y Universidades, Junta de Andalucía, projects P18-RT-2135 and CV20-35470In the aftermath of the Great Recession, the Spanish government reduced the replacement rate (RR) from 60 percent to 50 percent after 180 days of unemployment for all spells beginning on or after July 15, 2012. Using Social Security data and a differences-in-differences approach, we find that reducing the RR by ten percentage points (or 17 percent) increases workers’ odds of finding a job by 41 percent relative to similar workers not affected by the reform. To put it differently, the reform reduced the mean expected unemployment duration by 5.7 weeks (or 14 percent), implying an elasticity of 0.86. A regression discontinuity approach indicates that the reform increased the job-finding rate by 26 percent. We find strong behavioral effects as the reform reduced the expected unemployment duration right from the beginning of the unemployment spell. While the reform had no effect on wages, it did not decrease other measures of post-displacement job-match quality. After 15 months, the reform decreased unemployment insurance expenditures by 16 percent, about one-half of which are explained by job seekers’ behavioral changes.application/pdfenAttribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/Unemploymentjournal articleopen access