Experience rating and the generosity of unemployment insurance: Effects on county and metropolitan unemployment rates

Abstract

I find that state policies affect county and metropolitan area unemployment rates, particularly their policies with respect to unemployment compensation. A generous compensation system is associated with higher unemployment rates, and greater experience rating is associated with lower rates. I also find that greater unionization is associated with higher unemployment rates. Secular manufacturing growth has a weak negative association with unemployment rates in nonmetropolitan counties, but no association in metropolitan areas.