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Employer Tax Evasion in the Unemployment Insurance Program

Author

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  • Blakemore, Arthur E
  • Burgess, Paul L
  • Low, Stuart A
  • St Louis, Robert D

Abstract

The authors use unique data to analyze employer tax compliance with Unemployment Insurance (UI) provisions. The data indicate that employers may have underreported $728 million of UI taxes nationally in 1987 alone. To formally examine this noncompliance, a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates, among other things, likely increases noncompliance by risk-neutral firms. This prediction is empirically verified. The finding that UI tax evasion is systematically related to various firm characteristics suggests that UI audits may be effectively targeted by statistical profiles derived from the authors' model, thereby improving compliance. Coauthors are Paul L. Burgess, Stuart A. Low, and Robert D. St. Louis. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Blakemore, Arthur E & Burgess, Paul L & Low, Stuart A & St Louis, Robert D, 1996. "Employer Tax Evasion in the Unemployment Insurance Program," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 210-230, April.
    • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:2:p:210-30
    DOI: 10.1086/209809
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    References listed on IDEAS

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    2. Annalisa Mastri & Dana Rotz & Elias S. Hanno, "undated". "Comparing Job Training Impact Estimates Using Survey and Administrative Data," Mathematica Policy Research Reports 157778d936f848ddb0b4e8e32, Mathematica Policy Research.
    3. Sheena McConnell & Peter Z. Schochet & Dana Rotz & Ken Fortson & Paul Burkander & Annalisa Mastri, 2021. "The Effects of Employment Counseling on Labor Market Outcomes for Adults and Dislocated Workers: Evidence from a Nationally Representative Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(4), pages 1249-1287, September.
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    6. Burt S. Barnow & David H. Greenberg, 2019. "Special Issue Editors’ Essay," Evaluation Review, , vol. 43(5), pages 231-265, October.
    7. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    8. Katharine G. Abraham & John Haltiwanger & Kristin Sandusky & James R. Spletzer, 2013. "Exploring Differences in Employment between Household and Establishment Data," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 129-172.
    9. Burt S. Barnow & David Greenberg, 2015. "Do Estimated Impacts on Earnings Depend on the Source of the Data Used to Measure Them? Evidence From Previous Social Experiments," Evaluation Review, , vol. 39(2), pages 179-228, April.
    10. Xiaoxue Li & Liu Tian & Jing Xu, 2020. "Missing social security contributions: the role of contribution rate and corporate income tax rate," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1453-1484, December.
    11. Peter Z. Schochet, 2021. "Long‐Run Labor Market Effects of the Job Corps Program: Evidence from a Nationally Representative Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(1), pages 128-157, January.
    12. Glismann, Hans H. & Schrader, Klaus, 2001. "Alternative Systeme der Arbeitslosenversicherung: das Beispiel der Vereinigten Staaten und des Vereinigten Königreichs," Kiel Working Papers 1032, Kiel Institute for the World Economy (IfW Kiel).
    13. Lin, Wen-Zhung & Yang, C. C., 2001. "A dynamic portfolio choice model of tax evasion: Comparative statics of tax rates and its implication for economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 25(11), pages 1827-1840, November.
    14. V. J. Hotz & J. K. Scholz, "undated". "Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data," Institute for Research on Poverty Discussion Papers 1224-01, University of Wisconsin Institute for Research on Poverty.

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