The Effects of Unemployment Insurance Taxes and Benefits on Layoffs Using Firm and Individual Data

50 Pages Posted: 14 Jul 2000 Last revised: 29 Jul 2010

See all articles by Patricia M. Anderson

Patricia M. Anderson

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Bruce D. Meyer

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies; National Bureau of Economic Research (NBER)

Date Written: December 1994

Abstract

We examine the effects of unemployment insurance (UI) experience rating on layoffs using high quality firm and individual data. Our preferred estimates imply that incomplete experience rating is responsible for over twenty percent of temporary layoffs. The results are more mixed regarding the predictions of the alternative models of UI as a firm adjustment cost or a component of the worker compensation package. While the evidence favors the adjustment cost model, some of the predictions of each of these models are rejected by at least one of our specifications. Using our new data, we also confirm the correlation between experience rating proxies and layoffs found in past studies. However, the differences between these proxies and state average firm tax costs and the anomalous instrumental variables estimates that we find suggest that it may be inappropriate to causally interpret this correlation.

Suggested Citation

Anderson, Patricia M. and Meyer, Bruce D., The Effects of Unemployment Insurance Taxes and Benefits on Layoffs Using Firm and Individual Data (December 1994). NBER Working Paper No. w4960. Available at SSRN: https://ssrn.com/abstract=226559

Patricia M. Anderson (Contact Author)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States
603-646-2532 (Phone)
603-646-2122 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Bruce D. Meyer

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States
(773) 702-2712 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
26
Abstract Views
1,754
PlumX Metrics