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The Displacement Effect of Reemployment Bonus Programs

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Author Info
Davidson, Carl
Woodbury, Stephen A

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Abstract

The authors develop a partial equilibrium matching model of the labor market in order to examine whether adoption of a reemployment bonus would displace workers not offered the bonus. They examine the displacement effect for (1) unemployment-insurance-eligible workers who are offered but do not find a job in time to qualify for a bonus and (2) unemployment-insurance-ineligible workers who are never offered a bonus. The model predicts minimal displacement of the former group. But for the latter group, the model predicts an increase in unemployment duration of 0.2-0.4 week and an increase in unemployment of up to two per thousand. Copyright 1993 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 11 (1993)
Issue (Month): 4 (October)
Pages: 575-605
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Handle: RePEc:ucp:jlabec:v:11:y:1993:i:4:p:575-605

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pissarides, C A, 1984. "Efficient Job Rejection," Economic Journal, Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen. [Downloadable!] (restricted)
  2. Kim B. Clark & Lawrence H. Summers, 1984. "Unemployment Insurance and Labor Force Transitions," NBER Working Papers 0920, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Seater, John J, 1979. "Job Search and Vacancy Contacts," American Economic Review, American Economic Association, vol. 69(3), pages 411-19, June. [Downloadable!] (restricted)
  5. repec:fth:prinin:242 is not listed on IDEAS
  6. Bruce Meyer, 1988. "Implications of the Illinois Reemployment Bonus Experiments for Theories of Unemployment and Policy Design," Working Papers 622, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  7. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December. [Downloadable!] (restricted)
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This page was last updated on 2009-10-24.

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