We study how optimal unemployment insurance (UI) benefits vary over the business cycle by estimating how the moral hazard cost and the consumption smoothing benefit of UI vary with the unemployment rate. We find that the moral hazard cost is procyclical, greater when the unemployment rate is...

Ever since the seminal work of Stigler (1962), economists have recognized that information in markets is costly to acquire and can lead to “search frictionsâ€. The remarkable growth in online search has substantially lowered the cost of information acquisition. Despite this, there is...

This paper studies the role of employer behavior in generating “negative duration dependence†– the adverse effect of a longer unemployment spell – by sending fictitious resumes to real job postings in 100 U.S. cities. Our results indicate that the likelihood of receiving...

We explore the extent to which composition, duration dependence, and labor force non-participation can account for the sharp increase in the incidence of long-term unemployment (LTU) during the Great Recession. We first show that compositional shifts in demographics, occupation, industry,...

Since the seminal work of Stigler in 1962, economists have recognized that information is costly to acquire and leads to “search frictions.” Growth in online search has lowered the cost of information acquisition. We analyze the expansion of the website Craigslist, which allows users to post...

Using two strategies, we show that consumers underreact to taxes that are not salient. First, using a field experiment in a grocery store, we find that posting tax-inclusive price tags reduces demand by 8 percent. Second, increases in taxes included in posted prices reduce alcohol consumption...

This paper presents evidence that consumers underreact to taxes that are not salient and characterizes the welfare consequences of tax policies when agents make such optimization errors. The empirical evidence is based on two complementary strategies. First, we conducted an experiment at a...

A central assumption in public finance is that individuals optimize fully with respect to the incentives created by tax policies. In this paper, we test this assumption using two empirical strategies. First, we conducted an experiment at a grocery store where we posted tax-inclusive prices for...

This paper uses the random assignment of playing partners in professional golf tournaments to test for peer effects in the workplace. We find no evidence that the ability of playing partners affects the performance of professional golfers, contrary to recent evidence on peer effects in the...

This paper examines the optimal provision of unemployment insurance (UI) in a framework that accounts for behavioral responses along both the intensive and extensive margins. Two formulations of takeup are considered: in the first, individuals face a takeup cost that is exogenous; in the second,...