scholarly journals Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data

2021 ◽  
Vol 13 (1) ◽  
pp. 266-293 ◽  
Author(s):  
Andrew C. Johnston
Keyword(s):  
Unemployment Insurance ◽  
Great Recession ◽  
Firm Behavior ◽  
Labor Demand ◽  
Tax Rates ◽  
Payroll Tax ◽  
Administrative Records ◽  
The Great Recession ◽  
Quasi Experimental ◽  
Regression Kink Design

To finance unemployment insurance, states raise payroll tax rates on employers who engage in layoffs. Tax rates are, therefore, highest for firms after downturns, potentially hampering labor-market recovery. Using full-population, administrative records from Florida, I estimate the effect of these tax increases on firm behavior leveraging a regression kink design in the tax schedule. Tax hikes reduce hiring and employment substantially, with no effect on layoffs or wages. The results imply unanticipated costs of the financing regime which reduce the optimal benefit by a quarter and account for 12 percent of the unemployment in the wake of the Great Recession. (JEL D22, E24, H25, H32, H71, J23, J65)

scholarly journals Using Payroll Tax Variation to Unpack the Black Box of Firm-Level Production

2021 ◽  
Author(s):  
Youssef Benzarti ◽  
Jarkko Harju
Keyword(s):  
Black Box ◽  
Total Output ◽  
Tax Rates ◽  
Firm Level ◽  
Payroll Tax ◽  
Payroll Taxes ◽  
Input Factor ◽  
Experimental Variation ◽  
Quasi Experimental ◽  
Level Production

Abstract This paper uses quasi-experimental variation in payroll tax rates in Finland to investigate how firms use their input factors. We find that higher payroll tax rates lead to large employment responses and have no effects on employee-level earnings. As payroll taxes increase, firms substitute away from low-skilled, routine and manual workers. Higher firm-level payroll tax rates also slightly decrease the total output of firms. Our results imply that firm-level production and input factor choices are clearly affected by payroll taxes.

Nominal Wage Adjustments during the Pandemic Recession

2021 ◽  
Vol 111 ◽  
pp. 258-262
Author(s):  
John Grigsby ◽  
Erik Hurst ◽  
Ahu Yildirmaz ◽  
Yulia Zhestkova
Keyword(s):  
Great Recession ◽  
Labor Demand ◽  
Wage Distribution ◽  
Nominal Wage ◽  
The Great Recession ◽  
Wage Cuts

In this paper, we show that the pandemic recession has led to frequent cuts in nominal wages. Within three months in 2020, as many wage cuts had occurred as occurred throughout the Great Recession. Unlike employment declines, wage cuts were concentrated at the top of the wage distribution. However, these cuts have been relatively short lived, particularly among high earners. Finally, wage cuts have been concentrated in firms that have seen large employment declines. Wage cuts appear not to be a substitute for cutting employment, at least when the shock to labor demand is this large.

scholarly journals The US Unemployment Insurance Scheme: A Model for the EU?

2019 ◽  
Vol 54 (5) ◽  
pp. 314-318 ◽  
Author(s):  
Christiaan Luigjes ◽  
Georg Fischer ◽  
Frank Vandenbroucke
Keyword(s):  
Unemployment Insurance ◽  
Great Recession ◽  
The United States ◽  
Federal State ◽  
Insurance Scheme ◽  
The Great Recession ◽  
American Model ◽  
The Us ◽  
Minimum Requirements ◽  
The Eu

Abstract The system of unemployment insurance (UI) used in the United States has often been cited as a model for Europe. The American model illustrates that it is possible to create and maintain a UI system based on federal-state co-financing that intensifies during economic crises and thus reinforces protection and stabilisation. Central requirements and conditional funding can improve the aggregate protection and stabilisation capacity of the system. However, the architecture of the US system financially incentivises states to organise retrenchment of their own efforts for UI, which in turn leads to a divergence of benefit generosity and coverage levels. During the Great Recession, the federal government mitigated these incentives for retrenchment through minimum requirements attached to federal financial intervention. With regards to the European unemployment re-insurance system debate, the US experience implies both positive and encourageing conclusions and cautionary lessons.

scholarly journals Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

2016 ◽  
Vol 8 (1) ◽  
pp. 257-290 ◽  
Author(s):  
Brian C. Cadena ◽  
Brian K. Kovak
Keyword(s):  
Labor Markets ◽  
Geographic Variation ◽  
Great Recession ◽  
Labor Demand ◽  
Employment Outcomes ◽  
Local Labor Markets ◽  
The Great Recession ◽  
Native Workers ◽  
Spatial Differences ◽  
Employment Probabilities

This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes for low-skilled native workers. We leverage the substantial geographic variation in labor demand during the Great Recession to identify migration responses to local shocks and find that low-skilled Mexican-born immigrants respond much more strongly than low-skilled natives. Further, Mexican mobility reduced the incidence of local demand shocks on natives, such that those living in metro areas with a substantial Mexican-born population experienced a roughly 50 percent weaker relationship between local shocks and local employment probabilities. (JEL E32, J15, J23, J24, J61, R23)

Unemployment Insurance

2014 ◽  
Author(s):  
Stephen A. Woodbury
Keyword(s):  
United States ◽  
Federal Government ◽  
Unemployment Insurance ◽  
Great Recession ◽  
The United States ◽  
Federal State ◽  
Income Support ◽  
The Great Recession ◽  
System P ◽  
Primary Responsibility

Unemployment insurance (UI) provides temporary income support to workers who have lost their jobs and are seeking reemployment. This chapter reviews the origins of the federal-state UI system in the United States and outlines its principles and goals. It also describes the conditions for benefit eligibility, the benefits themselves, and their financing. The UI system is complex and includes many interested parties, including employers, worker advocates, state UI administrators, and the federal government. These parties’ differing views have led to controversies over benefit eligibility, adequacy, and whether the states or federal government should bear primary responsibility for UI. The Great Recession caused most states’ UI trust funds to become insolvent and led to renewed debate over the structure and financing of the system.

scholarly journals US AND UK LABOUR MARKETS BEFORE AND DURING THE COVID-19 CRASH

2020 ◽  
Vol 252 ◽  
pp. R52-R69 ◽  
Author(s):  
David N.F. Bell ◽  
David G. Blanchflower
Keyword(s):  
Labour Market ◽  
Unemployment Insurance ◽  
Great Recession ◽  
Vulnerable Groups ◽  
National Data ◽  
The Great Recession ◽  
Work From Home ◽  
The Us ◽  
The Uk ◽  
Distributional Impact

We examine labour market performance in the US and the UK prior to the onset of the Covid-19 crash. We then track the changes that have occurred in the months and days from the beginning of March 2020 using what we call the Economics of Walking About (EWA) that shows a collapse twenty times faster and much deeper than the Great Recession. We examine unemployment insurance claims by state by day in the US as well as weekly national data. We track the distributional impact of the shock and show that already it is hitting the most vulnerable groups who are least able to work from home the hardest – the young, the least educated and minorities. We have no official labour market data for the UK past January but see evidence that job placements have fallen sharply. We report findings from an online poll fielded from 11–16 April 2020 showing that a third of workers in Canada and the US report that they have lost at least half of their income due to the Covid-19 crisis, compared with a quarter in the UK and 45 per cent in China. We estimate that the unemployment rate in the US is around 20 per cent in April. It is hard to know what it is in the UK given the paucity of data, but it has gone up a lot.

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