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Cost-Effectiveness of Targeted Reemployment Bonuses

Author

Listed:
  • Christopher J. O’Leary
  • Paul T. Decke
  • Stephen A. Wandner

Abstract

Targeting reemployment bonus offers to unemployment insurance (UI) claimants identified as most likely to exhaust benefits is estimated to reduce benefit payments. We show that targeting bonus offers with profiling models similar to those in state Worker Profiling and Reemployment Services systems can improve 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 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.

Suggested Citation

  • Christopher J. O’Leary & Paul T. Decke & Stephen A. Wandner, 2005. "Cost-Effectiveness of Targeted Reemployment Bonuses," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  • Handle: RePEc:uwp:jhriss:v:40:y:2005:i:1:p270-279
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    References listed on IDEAS

    as
    1. 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.
    2. 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 513-530, September.
    3. 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.
    4. Christopher J. O'Leary & Robert G. Spiegelman & Kenneth J. Kline, 1995. "Do bonus offers shorten unemployment insurance spells? results from the washington experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(2), pages 245-269.
    5. Walter Corson & Paul T. Decker & Shari Miller Dunstan & Anne R. Gordon, "undated". "The New Jersey Unemployment Insurance Reemployment Demonstration Project: Final Evaluation Report," Mathematica Policy Research Reports a1188b0b75ad4085ab98457be, Mathematica Policy Research.
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    8. Robert B. Olsen & Marisa Kelso & Paul T. Decker & Daniel H. Klepinger, 2002. "Predicting the Exhaustion of Unemployment Compensation," Mathematica Policy Research Reports d0a9027f813a4bc397fce1190, Mathematica Policy Research.
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    11. Paul T. Decker, "undated". "Work Incentives and Disincentives," Mathematica Policy Research Reports e09c4ee64359405c8a52e13c4, Mathematica Policy Research.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Knoef, M.G. & van Ours, J.C., 2014. "How to Stimulate Single Mothers on Welfare to Find a Job : Evidence from a Natural Experiment," Discussion Paper 2014-030, Tilburg University, Center for Economic Research.
    4. Bas van der Klaauw & Sandra Vriend, 2015. "A Nonparametric Method for Predicting Survival Probabilities," Tinbergen Institute Discussion Papers 15-126/V, Tinbergen Institute.
    5. 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.
    6. Yonatan Ben-Shalom & Steve Bruns & Kara Contreary & David Stapleton, "undated". "Stay-at-Work/Return-to-Work: Key Facts, Critical Information Gaps, and Current Practices and Proposals," Mathematica Policy Research Reports a56bde146b0444f2a6bb67940, Mathematica Policy Research.
    7. 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.
    8. Stefanie Behncke & Markus Frölich & Michael Lechner, 2009. "Targeting Labour Market Programmes - Results from a Randomized Experiment," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(III), pages 221-268, September.
    9. 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;Instituto Superior de Economia e Gestao, vol. 11(3), pages 189-209, December.
    10. Marike Knoef & Jan C. van Ours, 2016. "How to stimulate single mothers on welfare to find a job: evidence from a policy experiment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1025-1061, October.
    11. Randall W. Eberts, "undated". "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.
    12. 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).
    13. Stephen A. Wandner, 2016. "Wage Insurance as a Policy Option in the United States," Upjohn Working Papers and Journal Articles 16-250, W.E. Upjohn Institute for Employment Research.
    14. Christopher J. O'Leary, 2017. "Evaluating Public Employment Programs with Field Experiments: A Survey of American Evidence," Upjohn Working Papers and Journal Articles 17-279, W.E. Upjohn Institute for Employment Research.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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