Unemployment insurance, recalls, and experience rating

In the United States, almost half of workers who separated from their jobs ended unemployment spell by returning to work for last employer. this study, we explore impact experience rating (ER) system on recalls. states using reserve ratio ER, and a firm that is not at minimum or maximum tax rate, each layoff worker receiving benefits increases future rate while recall reduces it. This provides natural incentive firms former benefits. We use Quarterly Workforce Indicators dataset, which information recalls county level, exploit differences in schedule across estimate ER show share hires with degree ER. then develop search matching model different insurance (UI) status, endogenous UI take-up, separations, recalls, new hires. illustrate reproduces effects admirably. an increase intensity translates into higher steady state, especially unemployed collecting analyze labor market dynamics under alternative financing schemes. has stabilization virtues—the less volatile rate.