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This paper analyzes the effects of unemployment insurance benefits on firmsā profitability and
the impact of unemployment insurance costs and labor productivity changes in this relation.
Using panel regression analysis with data from heterogeneous firms across multiple industries
and US states, we find that there is no statistically significant relation between unemployment
subsidies and firmsā profitability, except when we narrow our analysis to specific industries or
dimensions. Additionally, our findings suggest a negative significant impact of firmsā costs
with unemployment insurance benefits on profitability.
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Unemployment insurance Firm profitability Taxable wage bases Payroll tax rates
