Firms and Unemployment Insurance Take-up

We use administrative data to quantify the employer’s role in unemployment insurance (UI) take-up. First, there are employer effects in both claiming and appeals, and, consistent with deterrence effects, these are negatively correlated. Second, low-wage workers are less likely to claim and more likely to have their claims appealed than median-wage workers, and employer effects explain a large share of these income gradients. Third, high-claiming and low-appealing employers are desirable employers: they are higher-paying and have lower separation rates. Finally, the dominant source of targeting error in the UI system is that eligible workers do not apply. Our findings emphasize a novel dimension of the role of employers in the labor market, and have implications for the financing of UI.