  This study explores the impact of unemployment benefits on employment
quality, job stability, and tenure within complex labour market dynamics. Given
the macroeconomic consequences of changes in unemployment benefits, including
their impact on employment rates and output growth, we develop a closed
macroeconomic model that integrates heterogeneous households and adaptive firms
and incorporates real-world entry-exit market mechanisms. The model considers
personal values, social norms, and social network formation among workers as we
examine the role of social contacts in mediating the effects of unemployment
benefits on job-matching quality and labour market outcomes. We simulate the
model across various scenarios where unemployment benefit schemes differ in
level and/or duration. Our results suggest that extending the duration of
unemployment benefits does not necessarily improve job-matching quality. Longer
benefits may indeed reduce the effectiveness of social networks in job finding,
indicating that social contacts play a key role in labour market dynamics.
