A General Equilibrium Model of the Payroll Tax Incidence of State Unemployment Insurance Systems  

Oleh:

Murphy, Kevin J.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Finance Review vol. 31 no. 1 (Jan. 2003), page 44-65.
Fulltext: 44PFR311.pdf (108.92KB)

Isi artikel

This article presents a simple, general equilibrium model of unemployment insurance tax incidence for the United States. It is argued that the traditional partial-equilibrium explanation of payroll tax incidence is not appropriate in this case due to the unusual characteristics of theU.S. system. Specifically, theU.S. unemployment insurance tax system is an amalgam of state-run systems, across which tax rates and tax bases vary considerably. Moreover, it is argued that low taxable wage bases in conjunction with differing rates of geographic mobility across worker groups have important implications that can best be seen using a general equilibrium approach. The article’s main conclusion is that application of a general equilibrium approach to this particular question of payroll tax incidence yields a result basically opposite of what the standard partial-equilibrium approach would predict.

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