Effect of unemployment insurance tax on wages and reallocation of labour

Deergha Raj Adhikari, Wayne Everson and Lynn Gray

Applied Economics Letters, 2009, vol. 16, issue 2, 147-150

Abstract: We develop a labour market equilibrium model and show how the federally collected Unemployment Insurance (UI) Tax affects labour force allocation between regular labour and contract labour. We also analyse the effect of UI tax on wages of the two types of labour. Our model suggests that the effect of a UI tax will be to increase the employment and wages of contract labour and to reduce the employment and wages of regular labour.

Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:16:y:2009:i:2:p:147-150

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DOI: 10.1080/13504850601018247

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