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What Have We Learned from the Illinois Reemployment Bonus Experiment?

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  • Meyer, Bruce D

Abstract

This article analyzes an experimental program that offered payments to unemployment insurance recipients who found a job quickly. The experiment provided exogenous differences in individual incentives, which the author uses to test labor supply and search theories of unemployment. He examines predictions about the timing of exits from unemployment and the effect of the fixed-amount bonus on different wage level groups. The author also argues that the experimental evidence does not show the desirability of a permanent program. A permanent program would sharply increase the compensation for short unemployment insurance spells, likely increasing the claims rate and possibly increasing unemployment. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Meyer, Bruce D, 1996. "What Have We Learned from the Illinois Reemployment Bonus Experiment?," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 26-51, January.
    • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:1:p:26-51
    DOI: 10.1086/209802
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    References listed on IDEAS

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    1. Ashenfelter, Orley, 1980. "Unemployment as Disequilibrium in a Model of Aggregate Labor Supply," Econometrica, Econometric Society, vol. 48(3), pages 547-564, April.
    2. Rebecca Blank & David Card, 1988. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," Working Papers 623, Princeton University, Department of Economics, Industrial Relations Section..
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    6. Shavell, Steven & Weiss, Laurence, 1979. "The Optimal Payment of Unemployment Insurance Benefits over Time," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1347-1362, December.
    7. Bruce D. Meyer, 1988. "Implications of the Illinois Reemployment Bonus Experiments for Theories of Unemployment and Policy Design," Working Papers 622, Princeton University, Department of Economics, Industrial Relations Section..
    8. Frank Brechling, 1981. "Layoffs and Unemployment Insurance," NBER Chapters, in: Studies in Labor Markets, pages 187-208, National Bureau of Economic Research, Inc.
    9. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-559, September.
    10. Patricia M. Anderson & Bruce D. Meyer, 1994. "Unemployment Insurance Benefits and Takeup Rates," NBER Working Papers 4787, National Bureau of Economic Research, Inc.
    11. Rebecca M. Blank & David E. Card, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1157-1189.
    12. Lawrence F. Katz, 1986. "Layoffs, Recall and the Duration of Unemployment," NBER Working Papers 1825, National Bureau of Economic Research, Inc.
    13. Jerry A. Hausman & David A. Wise, 1985. "Social Experimentation," NBER Books, National Bureau of Economic Research, Inc, number haus85-1, October.
    14. Bruce Meyer, 1988. "Implications of the Illinois Reemployment Bonus Experiments for Theories of Unemployment and Policy Design," Working Papers 622, Princeton University, Department of Economics, Industrial Relations Section..
    15. Lawrence F. Katz & Bruce D. Meyer, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(4), pages 973-1002.
    16. Sider, Hal, 1985. "Unemployment Duration and Incidence: 1968-82," American Economic Review, American Economic Association, vol. 75(3), pages 461-472, June.
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    18. Baily, Martin Neil, 1978. "Some aspects of optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 10(3), pages 379-402, December.
    19. Hausman, Jerry A. & Wise, David A. (ed.), 1985. "Social Experimentation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226319407, December.
    20. Bruce D. Meyer, 1988. "Implications of the Illinois Reemployment Bonus Experiments For Theories of Unemployment and Policy Design," NBER Working Papers 2783, National Bureau of Economic Research, Inc.
    21. Jerry A. Hausman & David A. Wise, 1985. "Introduction to "Social Experimentation"," NBER Chapters, in: Social Experimentation, pages 1-10, National Bureau of Economic Research, Inc.
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