Would Broadening the UI Tax Base Help Low-Income Workers?

Mark Duggan, Audrey Guo and Andrew Johnston

No 15020, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The tax base for state unemployment insurance (UI) programs varies significantly in the U.S., from a low of $7,000 annually in California to a high of $52,700 in Washington. Previous research has provided surprisingly little guidance to policy makers regarding the tradeoffs associated with this variation. In this paper, we use 37 years of data for all 50 states and Washington, D.C. to estimate the impact of the UI tax base on labor-market outcomes. We find that the low tax base that exists in California and many other states (and the necessarily higher tax rates that accompany these) negatively affects labor market outcomes for part-time and other low-earning workers.

Keywords: unemployment insurance; tax base; payroll taxes; experience rating (search for similar items in EconPapers)
JEL-codes: D22 H22 H25 H71 J23 J32 J38 J65 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2022-01
New Economics Papers: this item is included in nep-ias, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: AEA Papers and Proceedings, 2022, 112, 107–111

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