UNEMPLOYMENT-INSURANCE TAXES AND THE CYCLICAL AND SEASONAL PROPERTIESOF UNEMPLOYMENT

We combine Current Population Survey micro data for 1979-1987 with a n ewly assembled database of tax rates for the U.S. unemployment insuran ce system to measure the effects of imperfect experience-rating on the incidence of unemployment. We find a strong negative association betw een the degree of experience-rating and the rate of temporary layoff u nemployment, with the largest effect in recessionary years and the sma llest effect in expansionary years. Increases in the degree of experie nce-rating are also associated with dampened seasonal fluctuations in temporary layoffs, particularly in construction and durable manufactur ing.