Firms and Unemployment Insurance Take-up
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.
Thanks to Sarah Bana, Patrick Kline, Lee Lockwood, Ioana Marinescu, James Poterba, Raffaele Saggio, Maya Rossin-Slater, Heidi Williams, and Mary Zaki for helpful conversations. We are grateful to the Employment Security Department (ESD) of Washington State for allowing access to the Washington wage records, and especially to Jeff Robinson of ESD, whose help was essential to understanding the data. Ken Kline provided excellent research assistance. Sorkin thanks Stanford's Institute for Research in the Social Sciences and the Sloan Foundation for support while working on this project. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.