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Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the UI System

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  • Dan A. Black
  • Jeffrey A. Smith
  • Mark C. Berger
  • Brett J. Noel

Abstract

This paper examines the effect of the Worker Profiling and Reemployment Services (WPRS) system. This program 'profiles' UI claimants to determine their probability of benefit exhaustion (or expected spell duration) and then provides mandatory employment and training services to claimants with high predicted probabilities (or long expected spells). Using a unique experimental design, we estimate that the WPRS program reduces mean weeks of UI benefit receipt by about 2.2 weeks, reduces mean UI benefits received by about $143, and increases subsequent earnings by over $1,050. Much (but not all) of the effect results from a sharp increase in early exits from UI in the experimental treatment group compared to the experimental control group. These exits coincide with claimants finding out about their mandatory program obligations rather than with actual receipt of employment and training services. While the program targets those with the highest expected durations of UI benefit receipt, we find no evidence that these claimants benefit disproportionately from the program. In addition, we find strong evidence against the 'common effect' assumption, as the estimated treatment effect differs dramatically across quantiles of the untreated outcome distribution. Overall, the profiling program appears to successfully reduce the moral hazard associated with the UI program without increasing the take-up rate.

Suggested Citation

  • Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2002. "Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the UI System," NBER Working Papers 8825, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8825 Note: LS PE
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    Citations

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    Cited by:

    1. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2011. "What Can Active Labour Market Policies Do?," Papers EC1, Economic and Social Research Institute (ESRI).
    2. Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(III), pages 247-268, September.
    3. Røed, Knut & Jensen, Peter & Thoursie, Anna, 2002. "Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data," Working Paper Series 3/2002, Stockholm University, Swedish Institute for Social Research.
    4. McGuinness, Seamus & O'Connell, Philip J. & Kelly, Elish & Walsh, John R., 2011. "Activation in Ireland: An Evaluation of the National Employment Action Plan," Research Series, Economic and Social Research Institute (ESRI), number RS20.
    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. Micklewright, John & Nagy, Gyula, 2008. "Job Search Monitoring and Unemployment Duration: Evidence from a Randomised Control Trial," CEPR Discussion Papers 6711, C.E.P.R. Discussion Papers.
    7. Micklewright, John & Nagy, Gyula, 2005. "Job Search Monitoring and Unemployment Duration in Hungary: Evidence from a Randomised Control Trial," IZA Discussion Papers 1839, Institute for the Study of Labor (IZA).
    8. McVicar, D. & Podivinsky, J.M., 2007. "Does the impact of active labor market programs depend on the state of the labor market? The case of the UK new deal for young people," Discussion Paper Series In Economics And Econometrics 0704, Economics Division, School of Social Sciences, University of Southampton.
    9. Fan, Yanqin & Park, Sang Soo, 2009. "Partial identification of the distribution of treatment effects and its confidence sets," MPRA Paper 37148, University Library of Munich, Germany.
    10. Robert J. LaLonde, 2003. "Employment and Training Programs," NBER Chapters,in: Means-Tested Transfer Programs in the United States, pages 517-586 National Bureau of Economic Research, Inc.
    11. Ana C. Dammert, 2009. "Heterogeneous Impacts of Conditional Cash Transfers: Evidence from Nicaragua," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 53-83, October.
    12. Randall W. Eberts & Christopher J. O'Leary, 2003. "A New WPRS Profiling Model for Michigan," Book chapters authored by Upjohn Institute researchers,in: Joshua Riley & Aquila Branch & Stephen Wandner & Wayne Gordon (ed.), A Compilation of Selected Papers from the Employment and Training Administration's 2003 Biennial National Research Conference, ETA Occasional Paper 20, pages 130-184 W.E. Upjohn Institute for Employment Research.
    13. Mark C. Berger & Dan Black & Jeffrey Smith, 2000. "Evaluating Profiling as a Means of Allocating Government Services," UWO Department of Economics Working Papers 200018, University of Western Ontario, Department of Economics.
    14. Carling, Kenneth & Larsson, Laura, 2002. "Does early intervention help the unemployed youth?," Working Paper Series 2002:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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