Unemployment insurance financing as a uniform payroll tax
Sebastian Graves, Jonathon Hazell, Walker F. Lewis and Christina Patterson
In the United States, unemployment insurance (UI) is financed by taxes levied on employers. We develop a model to decompose UI taxes into a firing tax component levied on firms that lay off workers, and a uniform payroll tax component levied on all firms regardless of their layoffs. We develop a novel methodology to measure the two components and document a number of facts about the uniform payroll tax component: it is large, accounting for just under half of UI taxes; it rises significantly after recessions; and it is more cyclical in states with poorly funded UI systems.
1 May 2022
AEA Papers & Proceedings 112, pp.97-101, 2022
https://benny.aeaweb.org/articles?id=10.1257/pandp.20221072
This Journal article is published under the centre's Labour programme.