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Cost-Effectiveness of Targeted Reemployment Bonuses

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Author Info
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)

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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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Publisher Info
Paper provided by W.E. Upjohn Institute for Employment Research in its series Staff Working Papers 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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Related research
Keywords: reemployment; bonus; UI; personal; accounts; PRA; unemployment; insurance; Upjohn; Institute; O'Leary; Decker; Wandner;

Find related papers by JEL classification:
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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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.:
  1. Christopher J. O'Leary & Paul Decker & Stephen A. Wandner, 1997. "Reemployment Bonuses and Profiling," Staff Working Papers 98-51, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  2. 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. [Downloadable!] (restricted)
  3. Paul T. Decker & Christopher J. O'Leary, 1994. "Evaluating Pooled Evidence from the Reemployment Bonus Experiments," Staff Working Papers 94-28, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  4. Davidson, Carl & Woodbury, Stephen A, 1993. "The Displacement Effect of Reemployment Bonus Programs," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 575-605, October. [Downloadable!] (restricted)
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  5. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-30, September. [Downloadable!] (restricted)
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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. Frank Oskamp & Dennis J. Snower, 2007. "Interactions between Employment and Training Policies," Kiel Working Papers 1389, Kiel Institute for the World Economy. [Downloadable!]
  2. 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!]
  3. Brown, Alessio J G & Merkl, Christian & Snower, Dennis J., 2007. "Comparing the Effectiveness of Employment Subsidies," CEPR Discussion Papers 6334, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Lynch, Lisa M., 2005. "Job Loss: Bridging the Research and Policy Discussion," IZA Discussion Papers 1518, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. 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). [Downloadable!]
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