Consequently, the impact ofUI on work incentives per se may be weaker in emerging economies. The welfare implications of UI depend on the extent to which increased duration on unemployment derives from a liquidity (or income) effect, i.e. the reduced need to return to work quickly to limit the impact of job loss on consumption, or a moral-hazard (or substitution) effect, i.e. the reduction in search intensity due to the subsidisation of unproductive leisure. The latter is a socially detrimental response as it fails to take account of the cost of unemployment for society.