Hiring under separation risk: Evidence from unemployment insurance taxes
Prof. Angie LOW
Associate Professor of Finance
Banking and Finance Division, Nanyang Business School
Nanyang Technological University
Date: 15 May 2026 (Friday)
Time: 10:00-11:30
Venue: E22-G015
Host: Prof. Jing XIE, Associate Professor in Finance
Abstract
We study how expected employment separation costs shape the internal allocation of hiring demand across firm locations. Using firm–state–year job postings from Lightcast over 2010–2024, matched to state-level unemployment insurance (UI) tax rules, we examine whether UI-related separation-cost exposure influences where firms recruit within the organization. Our empirical design compares postings across states within the same firm and year, and we use state borrowing under Title XII during the COVID period as an additional setting in which UI tax exposure rises following pressure on state trust funds. Higher statutory UI tax exposure is associated with fewer job postings in higher-cost states, with limited evidence of a decline in total firm-level postings. The results indicate that firms primarily reallocate vacancies toward lower-cost states rather than reduce overall recruiting. A one-standard deviation increase in expected UI tax exposure is associated with approximately 36% fewer postings in affected states, or about five fewer postings at the median firm–state–year. The response is stronger among firms with broader geographic scope and more limited internal liquidity. Higher policy-based exposure to experience-rated UI costs is also associated with a lower share of full-time non-internship postings, suggesting that firms reduce employment attachment when future separation costs are higher. These allocation responses are related to future profitability and market valuation, but not operating efficiency, consistent with a cost-based channel through which UI policy shapes firms’ internal allocation of labor commitments.
Speaker
Prof. Angie LOW is currently an Associate Professor of Finance at Nanyang Business School, Nanyang Technological University in Singapore and a fellow of the Asian Bureau of Finance and Economics Research. She received her Ph.D. in Finance from Ohio State University. Angie’s current research interests include corporate governance, managerial compensation, corporate culture, and corporate social responsibility. Her research has been published in leading journals, including Journal of Finance, Journal of Financial Economics, and Review of Financial Studies. She has received several best paper awards at leading international conferences and was awarded the Banking and Finance Division’s Research Excellence Award in 2010 and 2015. Her research is also featured in several media such as The Economists, Forbes, Bloomberg Businessweek, Harvard Business Review, Singapore Institute of Directors Quarterly Bulletin, etc.
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