Employment Effects of the Unemployment Insurance Tax Base

Po†Chun Huang

Journal of Human Resources, 2024, vol. 59, issue 5, 1387-1424

Abstract: I investigate the extent to which the low unemployment insurance (UI) tax base in the United States creates disincentives to hire low†wage workers. Using data from the Current Population Survey and state variation in the UI tax base over 30 years, I show that a 10 percent nominal increase in the base raises the teenage employment rate by 1.2 percent. It raises teen/adult and high school/college graduate employment. Indexing the tax base increases the teenage employment rate by 6 percent. The erosion of the UI tax base has thus reduced the employment of low†wage workers.

JEL-codes: H25 H71 J23 J65 (search for similar items in EconPapers)
Date: 2024
Note: DOI: https://doi.org/10.3368/jhr.0719-10316R2
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