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The Impact of Reemployment Bonuses on Insured Unemployment in the New Jersey and Illinois Reemployment Bonus Experiments

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  • Paul T. Decker
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    Abstract

    Separate social experiments conducted in New Jersey and Illinois tested the effect of offering Unemployment Insurance (UI) claimants a cash bonus for rapid reemployment. The Illinois bonus was constant over time, while the New Jersey bonus declined over time, so that the bonus received was greater the earlier that reemployment occurred. This paper compares the effects of the bonus offers on the rate at which claimants exited UI. The New Jersey and Illinois bonus offers generated similar increases in the UI exit rate during the period in which claimants could qualify for the bonus. However, the declining New Jersey bonus had little impact on long-term claimants who exhausted their UI benefits. In contrast, the constant Illinois bonus had a substantial impact on long-term claimants, thereby reducing the rate at which claimants exhausted their UI benefits. This finding at least partly explains why the Illinois bonus had a larger impact on UI receipt than the New Jersey bonus.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 29 (1994)
    Issue (Month): 3 ()
    Pages: 718-741

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    Handle: RePEc:uwp:jhriss:v:29:y:1994:iii:1:p:718-741

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Paul Decker & Christopher J. O'Leary & Stephen A. Woodbury, 2001. "Impacts on Employment and Earnings," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research.
    2. Hyun Kim & Yong-seong Kim & Myoung-jae Lee, 2012. "Treatment effect analysis of early reemployment bonus program: panel MLE and mode-based semiparametric estimator for interval truncation," Portuguese Economic Journal, Springer, Springer, vol. 11(3), pages 189-209, December.
    3. van der Klaauw, Bas & van Ours, Jan C., 2010. "Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates," IZA Discussion Papers 5055, Institute for the Study of Labor (IZA).
    4. repec:dgr:uvatin:2010064 is not listed on IDEAS
    5. Yosuke Oda, 2008. "Alteration in Skills and Career-Enhancing in a Frictional Labor Market," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 08-09, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    6. Christopher J. O'Leary & Paul T. Decker & Stephen A. Wandner, 2002. "Targeting Reemployment Bonuses," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Stephen A. Wandner & Randall W. Eberts & Christopher J. O'Leary (ed.), Targeting Employment Services, chapter 6, pages 161-182 W.E. Upjohn Institute for Employment Research.
    7. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2002. "Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the UI System," NBER Working Papers 8825, National Bureau of Economic Research, Inc.

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