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Cost-Effectiveness of Targeted Reemployment Bonuses

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  • Christopher J. O'Leary

    ()
    (W.E. Upjohn Institute for Employment Research)

  • Paul T. Decker

    (Mathematica Policy Research, Inc.)

  • Stephen A. Wandner

    (Employment and Training Administration, U.S. Department of Labor)

Abstract

Targeting reemployment bonus offers to unemployment insurance (UI) claimants identified as most likely to exhaust benefits is estimated to reduce benefit payments. While earlier research indicated that non-targeted reemployment bonus offers would not be good public policy, in this paper we show that targeting bonus offers with profiling models similar to those in state Worker Profiling and Reemployment Services (WPRS) systems can improve their cost effectiveness. Since estimated average benefit payments do not steadily decline as the eligibility screen is gradually tightened, we find that narrow targeting is not optimal. The best candidate to emerge for a targeted reemployment bonus is a low bonus amount with a long qualification period, targeted to the half of profiled claimants most likely to exhaust their UI benefit entitlement.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 03-51.

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Date of creation: Jan 2003
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Handle: RePEc:upj:weupjo:03-51

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Keywords: reemployment; bonus; UI; personal; accounts; PRA; unemployment; insurance; Upjohn; Institute; O'Leary; Decker; Wandner;

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References

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  1. Christopher J. O'Leary & Robert G. Spiegelman & Kenneth J. Kline, . "Do Bonus Offers Shorten Unemployment Insurance Spells? Results from the Washington Experiment," Upjohn Working Papers and Journal Articles cjo19954, W.E. Upjohn Institute for Employment Research.
  2. Paul T. Decker & Christopher J. L'Leary, 1995. "Evaluating Pooled Evidence from the Reemployment Bonus Experiments," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 534-550.
  3. Carl Davidson & Stephen A. Woodbury, . "The Displacement Effect of Reemployment Bonus Programs," Upjohn Working Papers and Journal Articles cdsaw1993, W.E. Upjohn Institute for Employment Research.
  4. Stephen A. Woodbury & Robert G. Spiegelman, . "Bonuses to Workers and Employers to Reduce unemployment: Randomized Trials in Illinois," Upjohn Working Papers and Journal Articles sawrgs1987, W.E. Upjohn Institute for Employment Research.
  5. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
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Cited by:
  1. Behncke, Stefanie & Frölich, Markus & Lechner, Michael, 2007. "Targeting Labour Market Programmes - Results from A Randomised Experiment," CEPR Discussion Papers 6537, C.E.P.R. Discussion Papers.
  2. Randall W. Eberts, . "After the Doors Close: Assisting Laid-Off Workers to Find Jobs," Upjohn Working Papers and Journal Articles rwe2005, W.E. Upjohn Institute for Employment Research.
  3. Walter Nicholson & Karen Needels, 2006. "Unemployment Insurance: Strengthening the Relationship between Theory and Policy," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 47-70, Summer.
  4. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2011. "Comparing the effectiveness of employment subsidies," Labour Economics, Elsevier, vol. 18(2), pages 168-179, April.
  5. Lisa M. Lynch, 2005. "Job loss: bridging the research and policy discussion," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 29-37.
  6. Knoef, Marike & van Ours, Jan C., 2014. "How to Stimulate Single Mothers on Welfare to Find a Job: Evidence from a Natural Experiment," IZA Discussion Papers 8188, Institute for the Study of Labor (IZA).
  7. Marike Knoef & Jan C. van Ours, 2014. "How to Stimulate Single Mothers on Welfare to Find a Job; Evidence from a Natural Experiment," CESifo Working Paper Series 4804, CESifo Group Munich.
  8. 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.
  9. Yosuke Oda, 2008. "Alteration in Skills and Career-Enhancing in a Frictional Labor Market," Discussion Papers in Economics and Business 08-09, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  10. 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, vol. 11(3), pages 189-209, December.
  11. Frank Oskamp & Dennis J. Snower, 2007. "Interactions between Employment and Training Policies," Kiel Working Papers 1389, Kiel Institute for the World Economy.

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