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Do bonus offers shorten unemployment insurance spells? results from the washington experiment

Author

Listed:
  • Christopher J. O'Leary

    (Senior Economist atthe W. E. Upjohn Institute for Employment Research)

  • Robert G. Spiegelman

    (Executive Director Emeritus at the W. E. Upjohn Institute for Employment Research)

  • Kenneth J. Kline

    (Research Analyst at the W. E. Upjohn Institute for Employment Research)

Abstract

Unemployment insurance is intended to reduce hardship by providing labor force members with partial wage replacement during periods of involuntary unemployment. However, in performing this income maintenance function, unemployment insurance may prolong spells of unemployment. Evidence from a field experiment conducted in Illinois in 1984 suggested that offering unemployment insurance claimants a modest cash bonus for rapid reemployment would increase the speed of return to work and reduce program costs. In 1988 a similar experiment, examining several different bonus offers, was conducted in the state of Washington. Evidence from the Washington experiment indicates that bonus offers do change job seeking behavior, but that only relatively generous bonus offers-about six times the weekly benefit amount-should be expected to significantly change the behavior of people eligible for unemployment benefits.

Suggested Citation

  • 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.
  • Handle: RePEc:wly:jpamgt:v:14:y:1995:i:2:p:245-269
    DOI: 10.2307/3325152
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    References listed on IDEAS

    as
    1. Rebecca M. Blank & David E. Card, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1157-1189.
    2. 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.
    3. Robert J. Gordon, 1973. "The Welfare Cost of Higher Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 133-206.
    4. Carl Davidson, 1990. "Recent Developments in the Theory of Involuntary Unemployment," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number rdtiu, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 2005. "Is retraining displaced workers a good investment?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 47-66.
    2. 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).
    3. van der Klaauw, B. & van Ours, J.C., 2010. "Carrot and Stick : How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates," Discussion Paper 2010-66, Tilburg University, Center for Economic Research.
    4. 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.
    5. Carl Davidson & Stephen A. Woodbury, 1996. "Unemployment Insurance and Unemployment Implications of the Reemployment Bonus Experiments," Book chapters authored by Upjohn Institute researchers,in: Advisory Council on Unemployment Compensation: Background Papers, volume 3, pages KK1-KK37 W.E. Upjohn Institute for Employment Research.
    6. 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).
    7. repec:mpr:mprres:3507 is not listed on IDEAS

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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