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Poor Performance as a Predictable Outcome: Financing the Administration of Unemployment Insurance

Author

Listed:
  • Marta Lachowska

    (W.E. Upjohn Institute for Employment Research)

  • Alexandre Mas

    (Princeton University)

  • Stephen A. Woodbury

    (Michigan State University)

Abstract

Effective administration of unemployment insurance (UI) is central to its ability to smooth consumption and act as an automatic stabilizer. The federal government’s method of allocating funds to administer UI gives the states no incentive to provide quality service at reasonable cost. We first document the deteriorating performance of the UI system in recent recessions and present estimates of a descriptive model relating state workloads to performance. We then characterize UI administration as a standard principal-agent problem, which leads to a method of allocating funds that would motivate states to adopt new technologies and improve performance.

Suggested Citation

  • Marta Lachowska & Alexandre Mas & Stephen A. Woodbury, 2022. "Poor Performance as a Predictable Outcome: Financing the Administration of Unemployment Insurance," Working Papers 653, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:653
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    References listed on IDEAS

    as
    1. Saul J. Blaustein, 1993. "Unemployment Insurance in the United States: The First Half Century," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number uius.
    2. Marta Lachowska & Wayne Vroman & Stephen A. Woodbury, 2020. "Experience Rating and the Dynamics of Financing Unemployment Insurance," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 673-698, September.
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    Cited by:

    1. Jonathan Cohen & Geoffrey C. Schnorr, 2024. "Efficiency Costs of Unemployment Insurance Denial: Evidence from Randomly Assigned Examiners," Upjohn Working Papers 24-404, W.E. Upjohn Institute for Employment Research.

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    More about this item

    Keywords

    unemployment insurance; government;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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