Previous studies dealt with optimal unemployment benefits systems and several studies discussed the psychological effects of unemployment. However, none of these studies compared the different types of unemployment benefits and their effect on the psychological factors of unemployment. In this thesis therefore, I will evaluate the different types of unemployment benefits according to their ability to stimulate unemployed to reenter the labor market, taking into account psychological factors. In order to achieve this, I will carry out a critical review of the existing literature on unemployment benefits and the psychological effects of being unemployed.