Absence of conflict of interest: This study was conducted by staff from Mathematica Policy Research, which administers CLEAR. Therefore, the review of this study was conducted by an independent consultant trained in applying the CLEAR causal evidence guidelines.
Citation
Decker, P., & O’Leary, C. (1995). Evaluating pooled evidence from the reemployment bonus experiments. The Journal of Human Resources, 30(3), 534-550.
Highlights
- This study’s objective was to assess the effectiveness of Pennsylvania and Washington programs that aimed to encourage faster reemployment among Unemployment Insurance (UI) recipients by offering them financial incentives for faster reemployment.
- Randomized controlled trials were conducted separately in both Pennsylvania and Washington State and included a total of about 27,500 UI claimants. The authors estimated impacts of the reemployment bonus programs on UI benefits receipt and earnings using state UI administrative records.
- The study found that, on average, UI claimants who had been randomly assigned to receive any of the reemployment bonus offers received 0.5 fewer weeks and $85 less in total UI benefits than those assigned to the control group. However, they were no more or less likely to exhaust UI benefits or have higher earnings in the year following random assignment than control group members.
- The quality of causal evidence presented in this report is high because it is based on pooled analysis of two well-implemented randomized controlled trials. This means we are confident that the estimated effects are attributable to reemployment bonus incentives, and not to other factors.
Intervention Examined
The Pennsylvania Reemployment Bonus Demonstration and the Washington Reemployment Bonus Experiment
Features of the Intervention
Pennsylvania
Implemented in 12 randomly selected offices across Pennsylvania, the demonstration restricted eligibility to UI claimants who had filed within the past two weeks, did not have a definite recall date to their former employers, and did not routinely obtain employment through a union hiring hall. The demonstration had six different bonus offerings. The first four entailed different combinations of reemployment bonus amounts—either three or six times the UI weekly benefit amount—and periods within which participants were required to find a job in order to claim the bonus, known as a qualification period. The qualification period was either 6 weeks or 12 weeks. In addition, to claim any bonus, claimants needed to maintain employment for four months. The fifth bonus offering started at a high amount during the 12-week qualification period but declined over time, and the sixth bonus offering was identical to the fourth, except that it excluded the offer of a job search workshop, which was available to all the other bonus groups.
Washington
In Washington, 21 of the job service centers operating at the time implemented the experiment. Six different bonus offerings were available to eligible UI claimants. These resulted from different combinations of reemployment bonus amounts—either two, four, or six times the UI weekly benefit amount—and periods within which participants were required to find a job in order to claim the bonus, known as a qualification period. The qualification period was either 7 or 13 weeks. To claim the bonus, participants needed to secure a job within the qualification period and maintain it for four months. In contrast to Pennsylvania, Washington did not deny eligibility to claimants with an expected recall date to their previous employers or to those who routinely obtained employment through a union hiring hall.
Features of the Study
In Pennsylvania, about 15,000 eligible UI claimants from 1988 and 1989 were randomly assigned to either receive the offer of one of the six reemployment bonuses or to an existing services control group, which was not offered a reemployment bonus and continued to receive weekly UI benefits payments subject to existing requirements. This study did not examine the fifth bonus type included in the original study because it was structured very differently from any of the other bonuses in Pennsylvania or Washington. The total analysis sample size from the Pennsylvania demonstration was about 12,000.
In Washington, more than 15,500 new UI claimants were randomly assigned into one of the six reemployment bonus groups or a control group from February to November 1988. Participants randomly assigned to the control group received the same weekly UI benefits payments over the same maximum weeks of eligibility, but were not offered a reemployment bonus.
This study pooled the data from the Pennsylvania and Washington experiments, using the enhanced statistical power of the much larger combined sample to determine the effectiveness of the reemployment bonus offer with greater certainty and precision. The authors estimated the average differences between a combined treatment group consisting of UI claimants randomly assigned to any of the treatment groups and control group members on UI benefits receipt and earnings drawn from UI administrative data.
Findings
Public benefits receipt
- The study found that UI claimants offered a reemployment bonus received 0.5 fewer weeks and $85 less in total UI benefits during their benefit years than those assigned to the existing services control group; these differences were statistically significant. However, claimants were neither more nor less likely to exhaust UI benefits.
- The reemployment bonuses had no statistically significant impacts on average quarterly earnings in the quarter in which claimants applied for benefits or three quarters thereafter.
Considerations for Interpreting the Findings
The labor market and UI program have changed considerably since the demonstrations examined in this study were conducted. Therefore, a similar study conducted in the current environment might find different results.
Causal Evidence Rating
The quality of causal evidence presented in this report is high because it is based on pooled analysis of two well-implemented randomized controlled trials. This means we are confident that the estimated effects are attributable to reemployment bonus incentives, and not to other factors.