Advanced Search
MyIDEAS: Login to save this paper or follow this series

Implications of the Illinois Reemployment Bonus Experiments For Theories of Unemployment and Policy Design

Contents:

Author Info

  • Bruce D. Meyer

Abstract

Reemployment bonus experiments offer large lump sum payments to unemployment insurance (UI) recipients who find a job quickly. Such experiments are underway or have been recently completed in four states. This paper analyzes the results from Illinois and discusses the implications of the experiments for theories of unemployment and policy design. I examine the hazard rate of exit from unemployment and find that it is significantly higher for the experimental groups, but only during the period of bonus eligibility. Both labor supply and search theories of unemployment are shown to suggest a rise in the reemployment hazard just before the end of bonus eligibility and to suggest larger effects of the fixed amount bonus for lower income groups. Only weak support is found for these hypotheses, which suggests limitations of the models of unemployment. Some modifications of the models are suggested. The experiments demonstrate the effects of economic incentives on job finding behavior but they do not show the desirability of a permanent reemployment bonus program. Evidence from another sample suggests that as many as half of those who received a reemployment bonus returned to their previous employer, so that a bonus program that pays people returning to their last employer would provide a strong encouragement to temporary layoffs. A discussion of UI claim filing behavior suggests that a permanent program could well increase the frequency or promptness of filing, thus reducing any financial advantages of a bonus program

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w2783.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2783.

as in new window
Length:
Date of creation: Dec 1988
Date of revision:
Publication status: published as Journal of Labor Economics, 14, Jan 1996, pp 26-51.
Handle: RePEc:nbr:nberwo:2783

Note: LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ashenfelter, Orley, 1980. "Unemployment as Disequilibrium in a Model of Aggregate Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 48(3), pages 547-64, April.
  2. Rebecca M. Blank & David Card, 1989. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," NBER Working Papers 2871, National Bureau of Economic Research, Inc.
  3. Shavell, Steven & Weiss, Laurence, 1979. "The Optimal Payment of Unemployment Insurance Benefits over Time," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(6), pages 1347-62, December.
  4. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, American Economic Association, vol. 73(4), pages 541-59, September.
  5. Frank Brechling, 1981. "Layoffs and Unemployment Insurance," NBER Chapters, National Bureau of Economic Research, Inc, in: Studies in Labor Markets, pages 187-208 National Bureau of Economic Research, Inc.
  6. Katz, Lawrence F & Meyer, Bruce D, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(4), pages 973-1002, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bijwaard, Govert E. & Ridder, Geert, 2005. "Correcting for selective compliance in a re-employment bonus experiment," Journal of Econometrics, Elsevier, Elsevier, vol. 125(1-2), pages 77-111.
  2. repec:fth:prinin:263 is not listed on IDEAS
  3. Davidson, Carl & Woodbury, Stephen A, 1993. "The Displacement Effect of Reemployment Bonus Programs," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(4), pages 575-605, October.
  4. repec:fth:prinin:257 is not listed on IDEAS

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2783. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.