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Effect of unemployment insurance tax on wages and employment: a partial equilibrium analysis

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  • Deergha Raj Adhikari
  • Lynn Gray
  • Jackie Burns

Abstract

We develop a partial equilibrium model under a cost minimization problem to derive the effect of an unemployment insurance tax. The model suggests that a portion of the tax is passed on to employees by means of reduced wages and employment.

Suggested Citation

  • Deergha Raj Adhikari & Lynn Gray & Jackie Burns, 2009. "Effect of unemployment insurance tax on wages and employment: a partial equilibrium analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 16(3), pages 247-250.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:3:p:247-250
    DOI: 10.1080/13504850601018254
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    References listed on IDEAS

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    1. Patricia M. Anderson & Bruce D. Meyer, "undated". "The Incidence of a Firm-Varying Payroll Tax: The Case of Unemployment Insurance," IPR working papers 95-23, Institute for Policy Resarch at Northwestern University.
    2. Kramarz, Francis & Philippon, Thomas, 2001. "The impact of differential payroll tax subsidies on minimum wage employment," Journal of Public Economics, Elsevier, vol. 82(1), pages 115-146, October.
    3. Kolm, Ann-Sofie, 1998. "Differentiated payroll taxes, unemployment, and welfare," Journal of Public Economics, Elsevier, vol. 70(2), pages 255-271, November.
    4. Anderson, Patricia M. & Meyer, Bruce D., 1997. "The effects of firm specific taxes and government mandates with an application to the U.S. unemployment insurance program," Journal of Public Economics, Elsevier, vol. 65(2), pages 119-145, August.
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    Cited by:

    1. Xinxin Ma & Jie Cheng, 2020. "The Impact of Social Insurance Contributions on Firms Employment and Wages: Evidence from China Employer-Employee Matching Survey Data," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(1), pages 42-60, March.
    2. Xinxin Ma & Dongyang Zhang, 2018. "The Incidence of Social Security Payroll Taxes: Evidence From China," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(4), pages 1-18, October.

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