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Unemployment Outflow and Unemployment Insurance Taxes

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  • Stepan Jurajda

    (CERGE-EI)

Abstract

The system of Unemployment Insurance (UI) financing in the US draws its funds from a payroll tax on employers and varies the tax rate according to the individual employer's layoff history. There exists extensive evidence on the effect of this so-called experience rated tax on layoff decisions. However, since firms are liable for each dollar of regular UI benefits paid to laid off former employees, experience rating may also affect recall behavior. The present study therefore measures the effect of the UI financing system on the duration of unemployment. Using duration data is essential since tax charges to the firm vary over the duration of unemployment spells. Empirical results based on data with various sources of variation suggest that higher layoff tax costs shorten the duration of recall unemployment.

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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0012005.

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Length: 23 pages
Date of creation: 19 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpla:0012005

Note: Type of Document - Acrobat PDF; pages: 23 ; figures: Included
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Web page: http://128.118.178.162

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  1. Guido W. Imbens & Lisa M. Lynch, 1993. "Re-Employment Probabilities over the Business Cycle," NBER Working Papers 4585, National Bureau of Economic Research, Inc.
  2. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-59, September.
  3. Pissarides, Christopher A, 1982. "Job Search and the Duration of Layoff Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 595-612, November.
  4. Stepan Jurajda & Frederick J. Tannery, 2003. "Unemployment durations and extended unemployment benefits in local labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(2), pages 324-348, January.
  5. Christofides, Louis N & McKenna, C J, 1996. "Unemployment Insurance and Job Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 286-312, April.
  6. John C. Ham & Samuel Rea, 1986. "Unemployment Insurance and Male Unemployment Duration in Canada," Working Papers 592, Princeton University, Department of Economics, Industrial Relations Section..
  7. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
  8. Stepan Jurajda, 2001. "In ow into Unemployment: Employment Spells and Unemployment Insurance," Labor and Demography 0012008, EconWPA.
  9. David Card & Phillip B. Levine, 1992. "Unemployment Insurance Taxes and the Cyclical and Seasonal Properties of Unemployment," NBER Working Papers 4030, National Bureau of Economic Research, Inc.
  10. Fallick, Bruce Chelimsky, 1991. "Unemployment Insurance and the Rate of Re-employment of Displaced Workers," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 228-35, May.
  11. Baily, Martin Neil, 1977. "On the Theory of Layoffs and Unemployment," Econometrica, Econometric Society, vol. 45(5), pages 1043-63, July.
  12. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
  13. Michael Baker & Rea Samuel A. Rea, 1995. "Employment Spells and Unemployment Insurance Eligibility Requirements," Labor and Demography 9505001, EconWPA.
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