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Would Broadening the UI Tax Base Help Low-Income Workers?

Author

Listed:
  • Mark Duggan
  • Audrey Guo
  • Andrew C. Johnston

Abstract

Unemployment insurance (UI) tax bases vary significantly in the United States, from a low of $7,000 annually in California to a high of $52,700 in Washington. Previous research has provided surprisingly little guidance regarding the consequences of this variation for either workers or employers. We use 37 years of data for all 50 states and Washington, DC, to estimate the impact of the UI tax base on part-time work. We find that the low tax base that exists in many states (and the necessarily higher tax rates that accompany them) lowers labor demand for part-time and other low-earning workers.

Suggested Citation

  • Mark Duggan & Audrey Guo & Andrew C. Johnston, 2022. "Would Broadening the UI Tax Base Help Low-Income Workers?," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 107-111, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:107-11
    DOI: 10.1257/pandp.20221074
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    References listed on IDEAS

    as
    1. Audrey Guo & Andrew C. Johnston, 2021. "The Finance of Unemployment Compensation and Its Consequences," Public Finance Review, , vol. 49(3), pages 392-434, May.
    2. Andrew C. Johnston, 2021. "Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 266-293, February.
    3. Guo, Audrey, 2020. "The Effects of Unemployment Insurance Taxation on Multi-Establishment Firms," MPRA Paper 97919, University Library of Munich, Germany.
    4. Anderson, Patricia M. & Meyer, Bruce D., 2000. "The effects of the unemployment insurance payroll tax on wages, employment, claims and denials," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 81-106, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mark Duggan & Audrey Guo & Andrew C. Johnston, 2023. "Experience Rating as an Automatic Stabilizer," Tax Policy and the Economy, University of Chicago Press, vol. 37(1), pages 109-133.
    2. Audrey Guo, 2023. "Payroll Tax Incidence: Evidence from Unemployment Insurance," Papers 2304.05605, arXiv.org.

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    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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