| Sumario: | To date, there have been several theoretical attempts at measuring the marginal cost of layoffs in Unemployment Insurance (UI) taxes. This article discusses the development of a new measure, which shows, in the most practical terms, the impact of making a given number of layoffs on an employer's UI tax rate. In addition, the article derives a measure for the maximum number of layoffs that an employer can make before it is assigned the maximum tax rate. Through these derivations, and the discovery of relatively small tax impacts of layoffs, the analysis provides a more thorough understanding of the methods used in UI experience rating.
|
|---|