This paper addresses economic issues related to the unemployment insurance (UI) system, focusing on the worker- and employer-facing aspects of UI policy—i.e., the ways that benefits are provided to workers and that employers are taxed to fund those benefits. We outline principles for optimal design, grounding these principles in the relevant research literature. These principles guide the empirical analysis of the paper, which focuses on establishing the quantitative importance of the considerations that motivate those principles. This leads to several specific areas of investigation and policy recommendations: benefit structure, rules for eligibility, experience-rated UI tax schedules, and interactions of UI with part-time work, among others.
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