Financing Unemployment Insurance

Wayne Vroman and Stephen Woodbury
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Wayne Vroman: Urban Institute

No 14-207, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: Following the Great Recession, most states' unemployment insurance (UI) trust funds became insolvent, requiring the states to borrow from the U.S. Treasury to finance benefit payments. This article describes the basics of UI financing and reviews the origins of the financial crisis facing the federal-state UI system. It then examines the main components of the UI payroll tax—the taxable wage base and the experience-rated payroll tax—and considers how these might be modified to avoid future widespread insolvency. We conclude with some speculative remarks on the future of UI financing.

Keywords: unemployment insurance; trust fund insolvency; payroll tax (search for similar items in EconPapers)
JEL-codes: H2 J65 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-ias
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Financing Unemployment Insurance (2014)
Working Paper: Financing Unemployment Insurance
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Persistent link: https://EconPapers.repec.org/RePEc:upj:weupjo:14-207

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