Economics at your fingertips  

Unemployment Insurance, Taxes, and Unemployment

Randall Wright () and Janine Loberg

Canadian Journal of Economics, 1987, vol. 20, issue 1, 36-54

Abstract: Unemployment insurance is financed by a tax on wages below a given ceiling. Daniel S. Hamermesh (1977) advocates raising this ceiling on distributional grounds. In a job-search model, this does decrease unemployment among low-wage workers, but also increases unemployment among high-wage workers, and lowers everyone's expected after-tax wage. An increase in the ceiling, combined with a proportionate reduction in the tax rate, decreases unemployment for low-wage workers while increasing their after-tax wage, without affecting high-wage workers at all. When unemployment benefits and wages are taxed at one rate, employment and wages are independent of that rate.

Date: 1987
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link) ... UITAU%3E2.0.CO%3B2-K (text/html)
only available to JSTOR subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Katherine Cuff

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().

Page updated 2022-08-15
Handle: RePEc:cje:issued:v:20:y:1987:i:1:p:36-54