Use of Unemployment Insurance and Public Employment Services after Leaving Welfare

Abstract

In this paper I examine the rates at which adults in households recently receiving Temporary Assistance to Needy Families (TANF) become jobless, apply for and receive unemployment insurance (UI) benefits, and participate in publicly funded employment services. I also investigate the correlation of UI and employment services receipt with maintenance of self-sufficiency through return to work and independence from TANF. The analysis is based on person-level administrative program records from four of the nine largest states between 1997 and 2003. Evidence suggests that three-quarters of new TANF leavers experience joblessness within three years, and one-quarter of the newly jobless apply for UI benefits. About 87 percent of UI applicants have sufficient prior earnings to qualify for UI benefits; however, only about 44 percent qualify based on their job separation reasons. Among all UI applicants, TANF leavers were found to have much higher rates of voluntary quits and employer dismissals than non-TANF leavers. Nonetheless, 50 percent of TANF leavers who apply for UI ultimately receive benefits. Public employment services are used by one-quarter of newly jobless TANF leavers. Among UI applicants, more than 75 percent use public employment services whether they receive UI benefits or not, while only 14 percent of newly jobless TANF leavers who do not apply for UI choose to use public employment services. Among TANF leavers who become jobless and apply for UI, the rate of return to TANF is lower for those who receive UI benefits. Rates of return to TANF are highest among nonbeneficiary UI applicants and non-UI applicants with low recent earnings.

Keywords: Unemployment insurance, temporary assistance to needy families, employment service, Wagner-Peyser, welfare, public assistance, unemployment, low-income, self-sufficiency, social safety net

JEL Classification: J65, I38, J68