Reemployment Incentives for Unemployment Insurance Beneficiaries:
Results from the Washington Reemployment Bonus Experiment
Upjohn Institute Staff Working Paper 93-22
Christopher J. O'Leary, Robert G. Spiegelman and Kenneth J. Kline
August, 1993
NOTE: A revised version of this paper appears in Journal of Policy Analysis and Management 14(2): 245-269, Spring 1995.
Abstract
Unemployment insurance is intended to reduce hardship by providing labor force members
with partial wage replacement during periods of involuntary unemployment. However, in
performing this income maintenance function, unemployment insurance may prolong spells of
unemployment. Evidence from a field experiment conducted in Illinois in 1984 suggested that
offering unemployment insurance claimants a modest cash bonus for rapid reemployment
would increase the speed of return to work and reduce program costs. In 1988 a similar
experiment, examining several different bonus offers, was conducted in Washington State.
Evidence from the Washington experiment indicates that bonus offers do change job seeking
behavior, but that only relatively generous bonus offers about six times the weekly benefit
amount should be expected to significantly change the behavior of persons eligible for
unemployment benefits.
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