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

This article analytically characterizes optimal social insurance in an economy with both ex ante heterogeneity and ex post risk,

I study the impact on grades assigned at Occidental College, a selective private liberal arts college, following the introduction of a policy that provides information about average grades across campus to instructors each semester. Using transcript level data from 2009 to 2014, I find that after the information provision, previously below average grading courses increased grades by 0.08 grade points more than the previously above average grading courses. This finding of grade compression holds across all course levels and divisions, expect for in the sciences. With respect to students, the relative increase in grades in the previously low grading courses disproportionately benefited Black and Hispanic students relative to White and Asian students. In addition, the grade distribution shifted with previously below average grading courses increasing the share of A’s and decreasing the share of B’s and C’s following the grade information provision.

This paper builds a model of efficiency wages with heterogeneous workers in the economy who differ with respect to their disutility of labor effort. In such an economy, two types of pure strategy symmetric Nash equilibria in firm wage offers can exist: a no-shirking equilibrium in which all workers exert effort while employed and a shirking equilibrium in which within each firm some workers exert effort while others shirk. The type of equilibrium that prevails in the economy depends crucially on the extent of heterogeneity among the workers and the equilibrium rate at which workers join firms from the unemployment pool.

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