Time-varying effects of recall expectation, a reemployment bonus, and job counseling on unemployment durations (Anderson 1992)
Anderson, P. (1992). Time-varying effects of recall expectation, a reemployment bonus, and job counseling on unemployment durations. Journal of Labor Economics, 10 (1), 99-115.
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- The study assessed the effectiveness of a reemployment bonus on the reemployment rates of Unemployment Insurance (UI) claimants with differing expectations of being recalled to their previous jobs.
- The study used data from the New Jersey Unemployment Insurance Reemployment Demonstration Project. For the demonstration, about 11,000 UI claimants were randomized into one of three treatment groups, all of which received some variation of Job Search Assistance (JSA) services, or into the control group, which could receive only existing services in the community. The author estimated weekly UI exit rates from state UI administrative records.
- The study found that the JSA-plus-reemployment-bonus group members were more likely than members of the JSA-only group to leave UI for a new job during weeks 7 through 12, which corresponded to the first half of the bonus qualification period, suggesting the bonuses were effective in spurring UI claimants to find new jobs more quickly.
- The quality of causal evidence presented in this report is moderate because it is a secondary analysis of data from a well-implemented randomized controlled trial for which attrition cannot be calculated. However, the author included sufficient statistical controls to receive a moderate evidence rating. This means we have some confidence that the estimated effects are attributable to the interventions studied, although other factors also could have contributed.
- See more CLEAR profiles related to The Reemployment Bonus Experiments.
Implemented in 10 randomly selected UI offices across New Jersey, the demonstration mandated participation in JSA services for displaced workers who were recently unemployed to foster their quick reemployment. The demonstration had three service offerings: (1) JSA only; (2) JSA plus training or relocation services; and (3) JSA plus a reemployment bonus. All three interventions shared the same JSA components: an orientation session and testing; five half-day job-search workshop sessions at local New Jersey UI offices; a one-on-one counseling and assessment session with office staff; and a requirement to maintain contact with the demonstration office, either by discussing job-search activities with office staff or using the office’s resource center to conduct job-search activities.
The JSA-only group received no services other than JSA services. In the JSA-plus-training group, staff informed participants about training and relocation services available and helped participants plan their training options. In the JSA-plus-reemployment-bonus group, participants who became reemployed quickly received a bonus equal to one-half of their remaining UI entitlement at the time of the assessment if they found employment within two weeks. The bonus declined in value by 10 percent of the original amount per week. Participants received 60 percent of the bonus if they held the job for 4 weeks; they received all of it if they were employed for 12 weeks. Bonuses were not available to claimants who were rehired by their former employer; were employed by a relative; or were in temporary, seasonal, or part-time work.
Eligibility screening for the demonstration excluded claimants who (1) had not received their first UI payment, had their first payment more than five weeks after their initial claim, had a partial first payment, or a special type of claim (such as a claim by an ex-service member); (2) were younger than 25 years old; (3) had been on their previous job for fewer than three years; (4) had a specific date for being recalled by their former employers; and (5) who were typically hired through union hiring halls.
Features of the Study
For the demonstration, all those eligible were randomly assigned to the JSA-only group (2,416 participants), JSA-plus-training group (3,810 participants), JSA-plus-reemployment-bonus group (2,449 participants), or the control group (2,385 participants). This study focused on when and at what rate UI claimants in the JSA-only and JSA-plus-reemployment-bonus groups left the UI rolls.
The study used hazard models to understand the influence of the reemployment bonus on two competing risks—leaving UI for a new job and leaving UI in response to recall from a previous employer—in each of four time periods: before week 7 (which was before the bonus offer for the JSA-plus-bonus group), weeks 7 through 12 (roughly the first half of the bonus period), weeks 13 through 18 (roughly the second half of the bonus period), and after week 18 (after the bonus period). The author hypothesized that, if the reemployment bonuses worked as intended, bonus-eligible claimants would have faster exit rates during the bonus period than those who were not bonus-eligible, but this could differ depending on claimants’ expectations of being recalled to their previous jobs. A second hypothesis held that if the JSA services were effective, those offered JSA should have higher exit rates over all periods than members of the control group.
- The study found that the JSA-plus-reemployment-bonus group members were more likely than members of the JSA-only group to leave UI for a new job during weeks 7 through12, which corresponded to the first half of the bonus qualification period, suggesting the bonuses were effective in spurring UI claimants to find new jobs more quickly. The study did not find any statistically significant differences between the JSA-only and control groups in UI exit rates.
- Across all research groups, UI claimants who expected to be recalled to a previous job were much more likely to be recalled and much less likely to exit UI for a new job. Over time, those who expected to be recalled but were not began to give up on their old jobs, and their probability of exiting UI for a new job increased.
Considerations for Interpreting the Findings
The study’s contribution was to test whether the effectiveness of JSA treatments could vary based on whether the UI claimant expected to be recalled to a job with a previous employer. Therefore, although the data analyzed in this study originated from a well-implemented randomized controlled trial, the author excluded observations of some participants for whom expectations of recall were missing. However, information about observations that were excluded from particular study groups was not presented in the study, making it impossible to determine attrition and making the study ineligible for a high causal evidence rating.
Causal Evidence Rating
The quality of causal evidence presented in this report is moderate because it is a secondary analysis of data from a well-implemented randomized controlled trial for which attrition cannot be calculated. However, the author included sufficient statistical controls to receive a moderate evidence rating. This means we have some confidence that the estimated effects are attributable to the interventions studied, although other factors also could have contributed.