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Unemployment Insurance and Employment

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  • Deere, Donald R

Abstract

This article examines the impact of unemployment insurance on the allocation of labor across industries. An overlooked aspect of unemployment insurance is the effect of imperfect experience rating on hiring. Firms in more stable industries generally pay more into the unemployment insurance system than their workers ever receive in benefits, thus subsidizing more volatile industries. The results indicate that industry employment shares are significantly affected by unemployment insurance and that there is a net shift of resources from the service industry to the construction industry. The estimates also imply that layoff unemployment is increased by about 5 percent because of unemployment-insurance-induced employment shifts. Copyright 1991 by University of Chicago Press.

Suggested Citation

  • Deere, Donald R, 1991. "Unemployment Insurance and Employment," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 307-324, October.
  • Handle: RePEc:ucp:jlabec:v:9:y:1991:i:4:p:307-24
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    File URL: http://dx.doi.org/10.1086/298271
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    Cited by:

    1. Cahuc, Pierre & Malherbet, Franck, 2004. "Unemployment compensation finance and labor market rigidity," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 481-501, March.
    2. Olivier Charlot & Franck Malherbet & Mustafa Ulus, 2016. "Unemployment Compensation and the Allocation of Labor in Developing Countries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(3), pages 385-416, June.
    3. Wayne Vroman & Stephen A. Woodbury, 2014. "Financing Unemployment Insurance," National Tax Journal, National Tax Association, vol. 67(1), pages 253-268, March.
    4. Vikström, Johan, 2009. "The effect of employer incentives in social insurance on individual wages," Working Paper Series 2009:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    5. Robert M. Hutchens, "undated". "A Path to Good Jobs? Unemployment and Low Wages: The Distribution of Opportunity for Young Unskilled Workers," Economics Public Policy Brief Archive 11, Levy Economics Institute.
    6. Katherine Baicker & Claudia Goldin & Lawrence F. Katz, 1998. "A Distinctive System: Origins and Impact of U.S. Unemployment Compensation," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 227-264 National Bureau of Economic Research, Inc.
    7. Bruce D. Meyer, 1992. "Policy Lessons from the U.S. Unemployment Experiments," NBER Working Papers 4197, National Bureau of Economic Research, Inc.
    8. Patricia M. Anderson & Bruce D. Meyer, 1993. "The Unemployment Insurance Payroll Tax and Interindustry and Interfirm Subsidies," NBER Chapters,in: Tax Policy and the Economy, Volume 7, pages 111-144 National Bureau of Economic Research, Inc.
    9. Michael Baker & Samuel A. Rea, 1998. "Employment Spells And Unemployment Insurance Eligibility Requirements," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 80-94, February.

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