By paying efficiency wages, firms contribute to higher unemployment because they unemployment insurance.
What is unemployment insurance?
- A joint federal-state program called unemployment insurance pays cash benefits to qualified workers. Although each state runs its own UI program, they all adhere to the same rules set down by federal law.
- The purpose of unemployment insurance payments (benefits) is to offer temporary financial support to unemployed workers who are out of work due to no fault of their own. Each state has its own unique conditions for beneficiaries' eligibility, benefit levels, and payment terms.
- Benefits are typically calculated as a percentage of your previous 52-week wages, with a maximum amount determined by each state. Benefits must be recorded on your income tax return since they are taxed at the federal and most state levels. You have the option of having the tax deducted from your payment.
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