Optimal Unemployment Insurance with Endogenous Negative Duration Dependence

摘要: This article characterizes optimal unemployment insurance (UI) in an economy with endogenous negative duration dependence hiring rates for the unemployed. The characterization generalizes standard Baily–Chetty result and is independent of particular mechanism generating rates. I find that at social optimum, UI equates moral hazard cost sum benefit a new externality correction term. sign this term depends, part, on responsiveness to benefit. show how effect turn depends assumptions about firm behavior, considering cases employer screening human capital depreciation models.