The Effects of the Unemployment Insurance Payroll Tax on Wages, Employment, Claims and Denials

Journal of Public Economics, Vol. 78, Issue 1-2, October 2000

Posted: 19 Aug 2001

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)

Abstract

Following a 13-year period when all employers in Washington paid the same unemployment insurance (UI) tax rate, Washington was forced to adopt an experience-rated tax system in 1985. We use this "natural experiment" to explore both tax incidence and the effects of experience rating. We find that industry average tax rates are largely passed on to workers through lower earnings. However, our estimates imply that a firm can shift much less of the difference between its tax rate and the industry average rate. Our results also indicate that experience rating reduces turnover and UI claims, and increases claim denials.

Keywords: Unemployment insurance, Payroll taxes, Incidence, Experience rating, Claim administration, Labor demand

JEL Classification: H22, J65

Suggested Citation

Anderson, Patricia M. and Meyer, Bruce D., The Effects of the Unemployment Insurance Payroll Tax on Wages, Employment, Claims and Denials. Journal of Public Economics, Vol. 78, Issue 1-2, October 2000. Available at SSRN: https://ssrn.com/abstract=252530

Patricia M. Anderson

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 (Contact Author)

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

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