Firms currently have incentives to temporarily lay off workers because firms typically are charged for ______ of workers' unemployment benefits.

Question

Quizplus · Accepted Answer

Firms are typically charged only a part of workers' unemployment benefits known as "experience rating" or "UI tax rate." This means that firms with a history of laying off workers will be charged a higher UI tax rate than those who rarely lay off workers. As a result, firms may choose to temporarily lay off workers rather than keeping them on during times of economic uncertainty or downturns.

Firms Currently Have Incentives to Temporarily Lay Off Workers Because