Firms and Unemployment Insurance Take-Up

Authors

Marta Lachowska, W.E. Upjohn Institute for Employment ResearchFollow
Isaac Sorkin, Stanford University and National Bureau of Economic ResearchFollow
Stephen A. Woodbury, Michigan State University and W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0001-9158-2592

https://orcid.org/0000-0002-4474-2415

Series

Upjohn Institute working paper ; 22-369

**Published Version**

In American Economic Review 115(8): 2529–73

DOI

10.17848/wp22-369

Issue Date

July 2022

Abstract

We use administrative data to quantify the firm role in unemployment insurance (UI) take-up. First, there are firm effects in both claiming and appeals, and, consistent with deterrence effects, these are negatively correlated. Second, low-wage workers are less likely to claim and more likely to have their claims appealed than median-wage workers, and firm effects explain a large share of these income gradients. Third, high-claiming and low-appealing firms are desirable firms: they are higher-paying and have lower separation rates. Finally, the dominant source of targeting error in the UI system is that eligible workers do not apply. Our findings emphasize a novel dimension of the role of firms in the labor market, and have implications for the financing of UI.

Subject Areas

UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Unemployment insurance; Benefits and duration