Hiring Under Separation Risk: Unemployment Insurance Taxes and the Geography of Job Postings

We study whether managers allocate new hiring across states to manage workforce-adjustment risk. U.S. unemployment insurance (UI) links employer tax rates partly to layoff histories, creating cross-state differences in prospective separation costs. Using Lightcast job postings matched to state UI rules from 2010–2024, we find that a one-standard-deviation increase in log-transformed maximum statutory UI tax liability per employee is associated with approximately 37\% fewer expected postings. We find little evidence of lower firm-wide posting activity, consistent with geographic reallocation. Higher exposure is also associated with a lower share of full-time, non-internship postings. Geographic responses are stronger when expected separation costs are more salient and firms have greater geographic flexibility. Evidence from Title XII borrowing during 2020 further supports the interpretation that anticipated UI-related labor costs influence hiring allocation. A greater posting tilt toward lower-exposure states is associated with higher market valuation but lower realized profitability and short-run operating efficiency. These findings connect managerial discretion over internal hiring allocation to workforce-risk management and firm outcomes, highlighting a potential trade-off between anticipated separation-cost savings and the operating consequences of where firms deploy labor.