As most here, I don't have to encourage my guys to chase Squirrels. Those, Possums and various other Varmints are natural "attractions" to our vigorous little companions.
Though I encourage this activity (chasing) I'd just as soon not see them do any "catching", so, I make sure that my resident population (of Squirrels) is well fed (bread/scraps/other) and water is available for them.
I feel if I have a healthy enough Squirrel population, they'll take care of themselves, and everyone will have fun in the chase.