Employment Effects of the Unemployment Insurance Tax Base

2019 ◽  
Author(s):  
Po-Chun Huang
Keyword(s):  
Unemployment Insurance ◽  
Tax Base ◽  
Employment Effects ◽  
Insurance Tax

A Context-Robust Measure of the Disincentive Cost of Unemployment Insurance

2017 ◽  
Vol 107 (5) ◽  
pp. 343-348 ◽  
Author(s):  
Johannes F. Schmieder ◽  
Till von Wachter
Keyword(s):  
Labor Market ◽  
Labor Supply ◽  
Unemployment Insurance ◽  
Employment Effects ◽  
Different Types

This paper proposes a new measure of the disincentive cost of unemployment insurance (UI): the ratio of the behavioral cost (BC) to the mechanical cost (MC) of a UI reform. This measure represents the labor supply distortion relative to the additional (mechanical) transfer from the UI reform. We show the BC/MC ratio naturally arises from a model of optimal UI and can be readily computed and compared across different types of reforms and labor market contexts. We summarize the evidence regarding the BC/MC ratio for existing studies and relate it to typical measures of employment effects of UI.

The Employment Effects of Lump-Sum and Contingent Job Insurance Policies: Evidence from Brazil

2020 ◽  
pp. 1-45
Author(s):  
Diogo G. C. Britto
Keyword(s):  
Labor Market ◽  
Unemployment Insurance ◽  
Informal Employment ◽  
Job Displacement ◽  
Severance Pay ◽  
Employment Effects ◽  
Insurance Policies ◽  
Lump Sum ◽  
Formal Employment ◽  
The Impact

Lump-sum job displacement policies (e.g. severance pay) are often presented as a better alternative to contingent policies (e.g. unemployment insurance) in the context of developing countries, under the rationale that the former are less harmful to formal employment as they do not incentivize substitution from formal to informal jobs. First, this paper provides original evidence on the employment effects of lump-sum income in the context of a developing country with high labor informality. Using Brazilian data, a regression discontinuity (RD) design shows that a transfer equivalent to 15 days of earnings (i) increases the duration out of a formal job by 1.9 weeks, (ii) reduces monthly earnings in the next job by 1.6%, and (iii) reduces total earnings in the formal labor market by 3.6% over a three-year period. Second, the paper studies the impact of a one-month extension in unemployment insurance (UI) on a comparable sample of displaced workers. UI is shown to have a stronger impact on the duration out of a formal job compared with a lump-sum transfer. In addition, a novel exercise matching administrative and survey data shows that 57% of the decrease in formal employment caused by UI is compensated by an increase in the incidence of informal employment. However, workers receiving the UI extension partially recover the initial employment loss over time in such a way that the adverse impact on employment over a three-year period is similar compared with the lump-sum transfer. Moreover, UI is found to be less harmful to re-employment wages, possibly because it improves the worker's bargaining power as it offers insurance against the duration of joblessness. Overall, the UI extension is less detrimental to total earnings in the formal labor market over a three-year period. Hence, although these findings indicate that contingent job insurance policies have a stronger impact on the initial duration out of a formal job and indeed incentivize informal employment, they do not support the notion that lump-sum policies are less harmful to formal employment and earnings in the medium term.

Effect of unemployment insurance tax on wages and reallocation of labour

2009 ◽  
Vol 16 (2) ◽  
pp. 147-150 ◽  
Author(s):  
Deergha Raj Adhikari ◽  
Wayne Everson ◽  
Lynn Gray
Keyword(s):  
Unemployment Insurance ◽  
Insurance Tax
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