"This dissertation consists of three chapters studying the effects of unemployment insurance (UI) on the behavior of workers and employers. The first chapter investigates how the low UI tax base in the United States creates a disincentive to hire low wage workers and by how much. In the United States, unemployment benefits are funded by a payroll tax levied on wages below a given ceiling. With this limit, the earnings of low-wage workers are taxed more heavily than are the earnings of high-wage workers. I offer evidence on the employment effects of the low UI tax base by exploiting state variation in the UI tax base over 30 years. Using a difference-in-differences design and data from the Current Population Survey, I estimate that indexing the tax base increases the teenage employment rate by about 2-3 percentage points, and doubling the tax base in the non-indexed states is estimated to raise the teenage employment rate by about 4 percentage points. These results offer evidence that the erosion of the real UI tax base has reduced the employment of low-wage workers. The second chapter uses administrative unemployment insurance (UI) data and an unemployment benefits extension for workers aged 45 or older in Taiwan to estimate the effects of extended benefits on unemployment duration and reemployment outcomes. Using a regression discontinuity design, we estimate that a 90-day increase in potential duration increases the insured duration by 57 days and the nonemployment duration by 41 days. While we do not find wage gains overall for UI recipients around 45 years old, the benefits extension is estimated to increase the reemployment wage for the lower-wage workers, who are most likely to exhaust their benefits. Our findings suggest that the liquidity constraints at the exhaustion point might play an important role in the effect of a benefit extension on job match quality. The third chapter estimates the effects of the Taiwanese reemployment bonus program on the timing of reemployment. The reemployment bonus in Taiwan has a unique structure--it offers 50% of the remaining UI entitlements to workers who become reemployed before exhausting their unemployment benefits. We exploit variation in bonus offer around the time the bonus was introduced to identify the incentive effects of the bonus program. Using administrative UI claim and corresponding earning records, we find that the bonus program in Taiwan provides unemployed workers strong incentives to accept reemployment--the program is estimated to increase the monthly hazard (conditional probability) of reemployment by nearly 7 percentage points (on a base of about 10 percent) in the first month of a nonemployment spell, and by 6.6 percentage points (on a base of about 9 percent) in the second month of a nonemployment spell (see Table 3.3). These are large increases in both absolute and relative terms--that is, they represent increases in the conditional probability of becoming reemployed of 68 percent and 75 percent in the first two months of nonemployment. Consistent with the declining bonus offer schedule, the estimated bonus effect on the monthly reemployment hazard gradually declines and disappears after the eighth month of the nonemployment spell."--Pages ii-iii.
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