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Alternative Methods of Experience Rating Unemployment Insurance Employer Taxes

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  • Michael Miller
  • Robert Pavosevich

Abstract

For most states the methodology used for assigning Unemployment Insurance tax rates to employers arose when the program was first established in 1935. More than 80 years later, with evolving employment relationships, state systems have become outmoded. This paper critiques current experience rating methods and presents new methodologies that are much easier to operate and that improve the incentives for employers to increase employment. The proposed methods would assess taxes based on employment or payroll variation such that growing firms would have lower taxes. A simulation analysis illustrates the impact of the new methods on employer groups.

Suggested Citation

  • Michael Miller & Robert Pavosevich, 2019. "Alternative Methods of Experience Rating Unemployment Insurance Employer Taxes," Public Budgeting & Finance, Wiley Blackwell, vol. 39(4), pages 28-47, December.
    • Handle: RePEc:bla:pbudge:v:39:y:2019:i:4:p:28-47
    DOI: 10.1111/pbaf.12244
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    Cited by:

    1. Guo, Audrey & Johnston, Andrew C., 2020. "The Finance of Unemployment Compensation and its Consequence for the Labor Market," IZA Discussion Papers 13330, Institute of Labor Economics (IZA).
    2. Korpela, Heikki, 2024. "Furlough unemployment," Working Papers 167, VATT Institute for Economic Research.
    3. Marta Lachowska & Isaac Sorkin & Stephen A. Woodbury, 2022. "Firms and Unemployment Insurance Take-Up," Upjohn Working Papers 22-369, W.E. Upjohn Institute for Employment Research.
    4. Albertini, Julien & Fairise, Xavier & Terriau, Anthony, 2023. "Unemployment insurance, recalls, and experience rating," Journal of Macroeconomics, Elsevier, vol. 75(C).

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