@misc{36029,
title = {Job Quality, Search, and Optimal Unemployment Contracts},
author = {Da Costa, Carlos and Maestri, Lucas and Santos, Cezar},
year = {2025},
doi = {10.18235/0013396},
abstract = {When searching for employment, workers consider non-wage job characteristics, such as effort requirements or amenities. We study an environment where unemployed workers search for jobs of different quality in a labor market characterized by directed search. In equilibrium, firms are more likely to post vacancies for low-quality jobs, as these are more profitable. Hence, high-quality jobs are hard to come across. The non-observability of these employment contracts influences the optimal unemployment insurance (UI) program, leading to distortionary taxation. Calibrating the model to the U.S. economy, we find that non-observability of employment contracts results in faster declining UI benefits, steeper taxes upon re-employment, distortionary taxation, and a 10.5% costlier program than an observable contract scenario providing equal welfare.},
url = {https://doi.org/10.18235/0013396}
}