Less-Skilled Workers, Welfare Reform, and the Unemployment Insurance System

36 Pages Posted: 20 Sep 2000 Last revised: 9 Oct 2010

See all articles by Cynthia K. Gustafson

Cynthia K. Gustafson

University of California, Berkeley - Department of Economics

Phillip B. Levine

Wellesley College; National Bureau of Economic Research (NBER)

Date Written: March 1998

Abstract

The declining economic position over the past two decades of those workers with less skill increases the importance of the unemployment insurance (UI) system in providing a safety net during periods of unemployment. Recent welfare reform legislation, designed to encourage labor market entry of typically very low-skilled workers who are likely to have unstable work patterns at best, potentially makes the UI system an even more critical component of the safety net. This paper seeks to determine how less-skilled workers typically fare in the UI system, estimating their likelihood of becoming eligible for and collecting benefits. We find that many workers who separate from a job, and particularly those with lower levels of skill, will not be compensated by the UI system. Although minimum earnings requirements keep some less-skilled job losers from receiving UI, it is the provision mandating that separations be involuntary' that prevents most workers from gaining UI eligibility. These findings suggest that the UI system will provide little additional support to the safety net following welfare reform.

Suggested Citation

Gustafson, Cynthia K. and Levine, Phillip B., Less-Skilled Workers, Welfare Reform, and the Unemployment Insurance System (March 1998). NBER Working Paper No. w6489. Available at SSRN: https://ssrn.com/abstract=226234

Cynthia K. Gustafson

University of California, Berkeley - Department of Economics

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

Phillip B. Levine (Contact Author)

Wellesley College ( email )

106 Central Street
Wellesley, MA 02181
United States
781-283-2162 (Phone)
781-283-2177 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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