This paper develops a model of equilibrium unemployment with duration-dependent unemployment insurance (UI) payments. As the government does not observe job offers, there is a moral hazard problem because the option of receiving further UI payments raises the job-seeker's value of remaining...

This paper studies how finite duration Unemployment Insurance (UI) benefit payments affect wage dispersion. It also provides a quantification of the implied re-entitlement effect. In a directed on-the-job search model, benefit duration is determined by recent employment history while benefit...