The Effect of Insurance Premium Taxes on Employment

31 Pages Posted: 1 Sep 2008

See all articles by Martin F. Grace

Martin F. Grace

Temple University - Risk Management & Insurance & Actuarial Science

David L. Sjoquist

Georgia State University

Laura A. Wheeler

Georgia State University - Fiscal Research Center

Date Written: August 19, 2008

Abstract

States levy insurance premium taxes, which are essentially gross receipt taxes on premiums, with insurance companies paying the higher of the tax rate in the state in which the company is domiciled and the state in which the policy is written. Using a state-level panel data set from 1992-2004 for the property-casualty insurance industry, we explore the effect of the effective insurance premium tax rates on state employment related to the insurance industry. We estimate both a static model and a dynamic adjustment model. We find that the insurance premium tax has a negative but modest effect on employment in the insurance industry.

Suggested Citation

Grace, Martin F. and Sjoquist, David L. and Wheeler, Laura A., The Effect of Insurance Premium Taxes on Employment (August 19, 2008). Andrew Young School of Policy Studies Research Paper Series No. 08-17. Available at SSRN: https://ssrn.com/abstract=1260392 or http://dx.doi.org/10.2139/ssrn.1260392

Martin F. Grace (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

David L. Sjoquist

Georgia State University ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-413-0246 (Phone)

HOME PAGE: http://frp.aysps.gsu.edu/sjoquist/index.html

Laura A. Wheeler

Georgia State University - Fiscal Research Center ( email )

33 Gilmer Street, SE Unit 2
Atlanta, GA 30303-3082
United States
(404) 651-3519 (Phone)
(404) 651-0416 (Fax)

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