UNEMPLOYMENT-INSURANCE IN THE UNITED-STATES - LAYOFF INCENTIVES AND CROSS SUBSIDIES

We survey unemployment insurance (UI) in the United States and provide new evidence on the UI payroll tax. Most UI receipt is due to firms that pay part of the UI costs of their layoffs, but weak experience rating leads most firms to pay considerably less than the full costs. Industries consistently receiving subsidies from the UI system are construction, manufacturing, and mining. Finally, a large fraction of layoffs resulting in payment of UI are made by firms that are not charged for the costs of the claim because they have employed the individual for less than 2 quarters.