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Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the UI System

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Author Info
Dan A. Black
Jeffrey A. Smith
Mark C. Berger
Brett J. Noel

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Abstract

This paper examines the effect of the Worker Profiling and Reemployment Services (WPRS) system. This program 'profiles' UI claimants to determine their probability of benefit exhaustion (or expected spell duration) and then provides mandatory employment and training services to claimants with high predicted probabilities (or long expected spells). Using a unique experimental design, we estimate that the WPRS program reduces mean weeks of UI benefit receipt by about 2.2 weeks, reduces mean UI benefits received by about $143, and increases subsequent earnings by over $1,050. Much (but not all) of the effect results from a sharp increase in early exits from UI in the experimental treatment group compared to the experimental control group. These exits coincide with claimants finding out about their mandatory program obligations rather than with actual receipt of employment and training services. While the program targets those with the highest expected durations of UI benefit receipt, we find no evidence that these claimants benefit disproportionately from the program. In addition, we find strong evidence against the 'common effect' assumption, as the estimated treatment effect differs dramatically across quantiles of the untreated outcome distribution. Overall, the profiling program appears to successfully reduce the moral hazard associated with the UI program without increasing the take-up rate.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8825.

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Date of creation: Mar 2002
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Handle: RePEc:nbr:nberwo:8825

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H0 - Public Economics - - General
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies

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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.:
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  21. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 1999. "Is the Threat of Training More Effective Than Training Itself? Experimental Evidence from the UI System," UWO Department of Economics Working Papers 9913, University of Western Ontario, Department of Economics. [Downloadable!]
    Other versions:
  22. Kornfeld, Robert & Bloom, Howard S, 1999. "Measuring Program Impacts on Earnings and Employment: Do Unemployment Insurance Wage Reports from Employers Agree with Surveys of Individuals?," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 168-97, January. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Randall W. Eberts, 2005. "After the doors close: assisting laid-off workers to find jobs," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 75-85. [Downloadable!]
  2. McVicar, Duncan & Podivinsky, Jan M, . "Does the Impact of Active Labor Market Programs Depend on the State of the Labor Market? The Case of the UK New Deal for Young People," Discussion Paper Series In Economics And Econometrics 0704, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
  3. Røed, Knut & Jensen, Peter & Thoursie, Anna, 2003. "Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data," Memorandum 09/2002, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  4. Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," UWO Department of Economics Working Papers 20006, University of Western Ontario, Department of Economics. [Downloadable!]
    Other versions:
  5. Mark C. Berger & Dan Black & Jeffrey Smith, 2000. "Evaluating Profiling as a Means of Allocating Government Services," UWO Department of Economics Working Papers 200018, University of Western Ontario, Department of Economics. [Downloadable!]
  6. Robert J. LaLonde, 2003. "Employment and Training Programs," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 517-586 National Bureau of Economic Research, Inc. [Downloadable!]
  7. John Micklewright & Nagy Gyula, 2005. "Job Search Monitoring and Unemployment Duration in Hungary: Evidence from a Randomised Control Trial," Budapest Working Papers on the Labour Market 0509, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
    Other versions:
  8. McVicar, Duncan & Podivinsky, P, 2003. "How Well Has the New Deal for Young People Worked in the UK Regions?," Working Papers NIERC. 79, Economic Research Institute of Northern Ireland. [Downloadable!]
    Other versions:
  9. Carling, Kenneth & Larsson, Laura, 2002. "Does early intervention help the unemployed youth?," Working Paper Series 2002:10, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  10. Randall W. Eberts & Christopher J. O'Leary, 2003. "A New WPRS Profiling Model for Michigan," Staff Working Papers 04-102, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  11. Dammert, Ana C., 2008. "Heterogeneous Impacts of Conditional Cash Transfers: Evidence from Nicaragua," IZA Discussion Papers 3653, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  12. McVicar, Duncan & Podivinsky, P, 2003. "Into Jobs or Into the Classroom? The UK New Deal for Young People," Working Papers NIERC. 80, Economic Research Institute of Northern Ireland. [Downloadable!]
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