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The Impact of Reemployment Bonuses on Insured Unemployment in the New Jersey and Illinois Reemployment Bonus Experiments

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  • Paul T. Decker

Abstract

Separate social experiments conducted in New Jersey and Illinois tested the effect 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.

Suggested Citation

  • Paul T. Decker, 1994. "The Impact of Reemployment Bonuses on Insured Unemployment in the New Jersey and Illinois Reemployment Bonus Experiments," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 718-741.
    • Handle: RePEc:uwp:jhriss:v:29:y:1994:iii:1:p:718-741
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    Cited by:

    1. 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.
    2. Hobbs, Duncan & Strain, Michael R., 2024. "Do Reemployment Bonuses Increase Employment? Evidence from the Idaho Return to Work Bonus Program," IZA Discussion Papers 16924, Institute of Labor Economics (IZA).
    3. Christopher J. O'Leary & Paul T. Decker & Stephen A. Wandner, 2002. "Targeting Reemployment Bonuses," Book chapters authored by Upjohn Institute researchers, in: Stephen A. Wandner & Randall W. Eberts & Christopher J. O'Leary (ed.), Targeting Employment Services, chapter 6, pages 161-182, W.E. Upjohn Institute for Employment Research.
    4. Dan A. Black & Mark C. Berger & Jeffrey A. Smith & Brett J. Noel, 1999. "Is the Threat of Training More Effective Than Training Itself? Experimental Evidence from the UI System," University of Western Ontario, Departmental Research Report Series 9907, University of Western Ontario, Department of Economics.
    5. 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.
    6. Paul Decker & Christopher J. O'Leary & Stephen A. Woodbury, 2001. "Impacts on Employment and Earnings," Book chapters authored by Upjohn Institute researchers, in: Philip K. Robins & Robert G. Spiegelman (ed.), Reemployment Bonuses in the Unemployment Insurance System: Evidence from Three Field Experiments, chapter 5, pages 151-174, W.E. Upjohn Institute for Employment Research.
    7. 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.
    8. 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.
    9. Donal O'Neill, 2000. "Evaluating Labour Market Interventions," Economics Department Working Paper Series n990300, Department of Economics, National University of Ireland - Maynooth.
    10. 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.
    11. Peter Dolton & Donal O'Neill, 2002. "The Long-Run Effects of Unemployment Monitoring and Work-Search Programs: Experimental Evidence from the United Kingdom," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 381-403, Part.

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