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Cost-Effectiveness of Targeted Reemployment Bonuses

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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.
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Suggested Citation

  • Christopher J. O'Leary & Paul T. Decker & Stephen A. Wandner, "undated". "Cost-Effectiveness of Targeted Reemployment Bonuses," Upjohn Working Papers cjo2005jhr, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:cjo2005jhr
    Note: Appears in Journal of Human Resources 40(1): 270-279
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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, vol. 29(Q II), pages 29-37.
    3. Knoef, Marike & van Ours, J.C., 2014. "How to Stimulate Single Mothers on Welfare to Find a Job : Evidence from a Natural Experiment," Other publications TiSEM e1759059-2c55-4269-8131-1, Tilburg University, School of Economics and Management.
    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, vol. 29(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. Ahn, Taehyun, 2018. "Assessing the effects of reemployment bonuses on job search: A regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 165(C), pages 82-100.
    8. 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.
    9. 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.
    10. van der Klaauw, B. & van Ours, J.C., 2010. "Carrot and Stick : How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates," Other publications TiSEM f368f876-0bd7-499d-8211-d, Tilburg University, School of Economics and Management.
    11. 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.
    12. 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.
    13. Zanella, Giulio & Salomone, Riccardo, 2025. "Incentive-based active labor market programs: Insights from policy experimentation in Italy," Labour Economics, Elsevier, vol. 93(C).
    14. 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.
    15. Stephen A. Wandner, 2016. "Wage Insurance as a Policy Option in the United States," Upjohn Working Papers 16-250, W.E. Upjohn Institute for Employment Research.
    16. Christopher J. O'Leary, 2017. "Evaluating Public Employment Programs with Field Experiments: A Survey of American Evidence," Upjohn Working Papers 17-279, W.E. Upjohn Institute for Employment Research.

    More about this item

    Keywords

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    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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