This paper examines whether firms exhibit less tax aggressiveness in order to mitigate workers' exposure to unemployment risk. We use unemployment insurance (UI) benefit laws as a proxy for unemployment risk and multiple measures of tax aggressiveness. Given that tax aggressiveness is risky and...

This paper examines the effect of labor unemployment risk on firm risk. Using unemployment insurance benefits as a proxy for unemployment risk, we find an economically significant positive relation between unemployment risk and firm risk. This positive relation is more pronounced for firms that...