Multilevel "General Policy Equilibria": Evidence from the American Unemployment Insurance Tax Ceiling
In a large variety of multilevel political systems changes imposed by a higher authority alter the equilibrium panoply of lower- level policies. The new equilibrium depends on the type of change imposed and on the relative strengths of and differences among interested parties at the lower level. As an example we describe how the equilibrium parameters of American states' unemployment insurance (UI) systems are changed when the federal government raises the minimum annual earnings on which employers are taxed to finance UI benefits. Even though benefits determine total taxes at a point in time within state systems, bargaining among the interested parties alters the equilibrium level of benefits and taxes. We estimate a `difference-in-differences' model describing total system costs in those states where federal increases in 1972, 1978 and 1983 forced increases in the tax ceiling. Holding constant changes in interstate differences in unemployment, where the federal constraint was binding costs rose roughly 20 percent above where they would have been. The increase was larger in those states where unionism, a measure of workers' legislative power, was greater. The theoretical model and the implied empirical analysis suggest themselves as examples for future research on a variety of topics in labor economics, public finance and international trade.
|Date of creation:||May 1996|
|Date of revision:|
|Publication status:||published as "Policy Equilibria in a Federal System: The Effects of Higher Tax Ceilings for Unemployment Insurance" Hamermesh, D. S.; Scoones, W. D.; Journal of Public Economics, November 1999, v. 74, iss. 2, pp. 191-213|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gene M. Grossman & Elhanan Helpman, 1992.
"Protection For Sale,"
NBER Working Papers
4149, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
- David Card, 1989.
"The Impact of the Mariel Boatlift on the Miami Labor Market,"
633, Princeton University, Department of Economics, Industrial Relations Section..
- David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
- David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," NBER Working Papers 3069, National Bureau of Economic Research, Inc.
- Adams, James D., 1986. "Equilibrium taxation and experience rating in a federal system of unemployment insurance," Journal of Public Economics, Elsevier, vol. 29(1), pages 51-77, February.
- Richard B. Freeman & James L. Medoff, 1979. "New estimates of private sector unionism in the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 32(2), pages 143-174, January.
- Anderson, Patricia M & Meyer, Bruce D, 1993. "Unemployment Insurance in the United States: Layoff Incentives and Cross Subsidies," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages S70-95, January.
- Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
- FitzRoy, Felix R & Hart, Robert A, 1985. "Hours, Layoffs and Unemployment Insurance Funding: Theory and Practice in an International Perspective," Economic Journal, Royal Economic Society, vol. 95(379), pages 700-713, September.
- Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5578. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.