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Unemployment Insurance and Unemployment Implications of the Reemployment Bonus Experiments

In: Advisory Council on Unemployment Compensation: Background Papers

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Abstract

We translate the results of the three reemployment bonus experiments that were conducted during the 1980s into (a) impacts of a 10-percentage point increase in the Unemployment Insurance (UI) replacement rate on the expected duration of unemployment; and (b) impacts of adding 1 week to the potential duration of UI benefits on the expected duration of unemployment. Our approach is to use an equilibrium search and matching model, calibrated using data from the bonus experiments and secondary sources. The results suggest that a 10-percentage point increase in the UI replacement rate increases the expected duration of unemployment by .3 to 1.1 week (a range consistent with, but only somewhat narrower than, the existing range of estimates), and that adding 1 week to the potential duration of UI benefits increases the expected duration of unemployment by .05 to .2 week (which is toward the low end of existing estimates).
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Suggested Citation

  • 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.
    • Handle: RePEc:upj:uchaps:cdsaw19963
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    Cited by:

    1. Davidson, Carl & Woodbury, Stephen A., 1997. "Optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 64(3), pages 359-387, June.
    2. Carl Davidson & Stephen A. Woodbury, 2001. "From Social Experiment to Program," Book chapters authored by Upjohn Institute researchers, in: Philip K. Robins & Robert G. Spiegelman (ed.), Reemployment Bonuses in the Unemployment Insurance System: Evidence from Three Field Experiments, chapter 6, pages 175-222, W.E. Upjohn Institute for Employment Research.
    3. Rodríguez-Planas, Núria, 2004. "Re-Employment Bonuses in a Signalling Model of Temporary Layoffs," IZA Discussion Papers 1010, IZA Network @ LISER.
    4. Stephen A. Woodbury & Murray Rubin, 1997. "The Duration of Benefits," Book chapters authored by Upjohn Institute researchers, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 6, pages 211-283, W.E. Upjohn Institute for Employment Research.
    5. Carl Davidson & Stephen A. Woodbury, 1997. "The Optimal Dole with Risk Aversion, Job Destruction, and Worker Heterogeneity," Upjohn Working Papers 97-47, W.E. Upjohn Institute for Employment Research.
    6. Saul J. Blaustein & Christopher J. O'Leary & Stephen A. Wandner, 1997. "Policy Issues: An Overview," Book chapters authored by Upjohn Institute researchers, in: Christopher J. O'Leary & Stephen A. Wandner (ed.), Unemployment Insurance in the United States: Analysis of Policy Issues, chapter 1, pages 1-49, W.E. Upjohn Institute for Employment Research.
    7. Christopher J. O'Leary & Stephen A. Wandner (ed.), 1997. "Unemployment Insurance in the United States: Analysis of Polciy Issues," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number uius2.
    8. Giles, John & Park, Albert & Cai, Fang, 2006. "Reemployment of dislocated workers in urban China: The roles of information and incentives," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 582-607, September.

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    Keywords

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    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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