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The Washington Reemployment Bonus Experiment: Final report (Spiegelman et al. 1992)

Citation

Spiegelman, R., O’Leary, C., & Kline, K. (1992). The Washington Reemployment Bonus Experiment: Final report. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.

Highlights

  • The study’s objective was to assess the impacts of the Washington Reemployment Bonus experiment, which aimed to encourage faster reemployment rates among Unemployment Insurance (UI) claimants by offering them financial incentives, on the UI benefits receipt of UI claimants.
  • In this demonstration about 15,500 eligible claimants were randomized into one of six treatment groups or a control group. The six treatment groups were offered different combinations of reemployment bonus amounts and periods within which they were required to find a job in order to claim the bonus. For all participants, the study team collected administrative data, which provided information on UI benefits receipt.
  • The study found that three of the bonus treatments reduced the weeks of UI benefits and total UI benefits dollars received, but the other three did not. Pooling across all bonus treatments, treatment group members received 0.4 fewer weeks and $65 less in UI benefits, on average, than their control group counterparts.
  • The quality of causal evidence presented in this study is high because it is based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the reemployment bonuses, and not to other factors.

Intervention Examined

The Washington Reemployment Bonus Experiment

Features of the Intervention

The experiment in Washington was implemented in 21 of the job service centers operating in Washington at the time. 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 benefits 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 had to secure a job within the qualification period and maintain it for four months.

Features of the Study

From February to November 1988, 15,541 new UI claimants were randomly assigned into one of the six reemployment bonus groups or a control group. 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. The study estimated the average difference between each of the treatment groups and the control group on measures of UI benefits receipt using data from UI administrative records. They also analyzed pooled treatment groups consisting of those with the same benefit amount (but different qualification periods) and all treatment groups together.

Findings

Public benefits receipt

  • The study found that three of the bonus treatments—high benefits with short qualification period, low benefits with long qualification period, and high benefits with long qualification period—reduced weeks of UI receipt by 0.6 to 0.8 weeks and total amount of UI received by $107 to $142 compared with the control group. These differences were statistically significant.
  • Pooling across all bonus treatments, treatment group members received 0.4 fewer weeks and $65 less in UI benefits, on average, than their control group counterparts, and these differences were statistically significant.
  • Only the low benefits and long qualification period treatment group experienced a statistically significant reduction in the proportion of claimants exhausting benefits, of 3.2 percentage points, relative to the control group.

Considerations for Interpreting the Findings

The authors also examined the impact of the reemployment bonuses on the quarterly earnings for the subgroup of study participants who terminated UI benefits before exhaustion and had nonzero wages in both the full quarter before filing for benefits and the one after termination of benefits. They found no statistically significant impacts of the reemployment bonus on earnings in any treatment group. However, because these impacts were examined only among those who found employment, they should not be interpreted as causal. In addition, the labor market and UI program have changed considerably since this study was 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 study is high because it is based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to reemployment bonuses, and not to other factors.

Additional Sources

O’Leary, C., Spiegelman, R., & Kline, K. (1993). Reemployment Incentives for Unemployment Insurance Beneficiaries: Results from the Washington Reemployment Bonus Experiment. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.

O’Leary, C., Spiegelman, R., & Kline, K. (1995). Do Bonus Offers Shorten Unemployment Insurance Spells? Results from the Washington Experiment. Journal of Policy Analysis and Management, 14(2), 245-269.

Reviewed by CLEAR

November 2014

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