Volume 29, Number 3 (Summer) 1994
Decker, Paul T. 1994. "The Impact of Reemployment Bonuses on Insured Unemployment in the New Jersey and Illinois Unemployment Insurance Experiments." Journal of Human Resources 29(3): 718-741.
Separate social experiments conducted in New Jersey and Illinois tested the effects of offering Unemployment Insurance (UI) claimants a cash bonus for rapid reemployment. The Illinois bonus was constant over time, while the New Jersey bonus declined over time, so that the bonus received was greater the earlier that reemployment occurred. This paper compares the effects of the bonus offers on the rate at which claimants exited UI. The New Jersey and Illinois bonus offers generated similar increases in the UI exit rate during the period in which claimants could qualify for the bonus. However, the declining New Jersey bonus had little impact on long-term claimants who exhausted their UI benefits. In contrast, the constant Illinois bonus had a substantial impact on long-term claimants, thereby reducing the rate at which claimants exhausted their UI benefits. This finding at least partly explains why the Illinois bonus had a larger impact on UI receipt than the New Jersey bonus.
Paul T. Decker is a senior economist at Mathematica Policy Research in Washington, DC. He would like to thank Anu Rangarajan, Walter Corson, Mark Dynarski, and Stuart Kerachsky for their comments on this paper and other related research. The data used in this article can be obtained beginning in February 1995 through February 1998 from the author at the following address: Mathematica Policy Research, 600 Maryland Avenue, SW, Suite 550, Washington, DC 20024.
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