Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the Ui System

50 Pages Posted: 8 Mar 2002 Last revised: 26 Oct 2010

See all articles by Dan Black

Dan Black

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies

Jeffrey A. Smith

University of Wisconsin - Madison; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Mark Berger

University of Kentucky - Department of Economics

Brett J. Noel

American Express Company

Date Written: March 2002

Abstract

This paper examines the effect of the Worker Profiling and Reemployment Services (WPRS) system. This program 'profiles' UI claimants to determine their probability of benefit exhaustion (or expected spell duration) and then provides mandatory employment and training services to claimants with high predicted probabilities (or long expected spells). Using a unique experimental design, we estimate that the WPRS program reduces mean weeks of UI benefit receipt by about 2.2 weeks, reduces mean UI benefits received by about $143, and increases subsequent earnings by over $1,050. Much (but not all) of the effect results from a sharp increase in early exits from UI in the experimental treatment group compared to the experimental control group. These exits coincide with claimants finding out about their mandatory program obligations rather than with actual receipt of employment and training services. While the program targets those with the highest expected durations of UI benefit receipt, we find no evidence that these claimants benefit disproportionately from the program. In addition, we find strong evidence against the 'common effect' assumption, as the estimated treatment effect differs dramatically across quantiles of the untreated outcome distribution. Overall, the profiling program appears to successfully reduce the moral hazard associated with the UI program without increasing the take-up rate.

Suggested Citation

Black, Dan and Smith, Jeffrey Andrew and Berger (deceased), Mark C. and Noel, Brett J., Is the Threat of Reemployment Services More Effective than the Services Themselves? Experimental Evidence from the Ui System (March 2002). NBER Working Paper No. w8825. Available at SSRN: https://ssrn.com/abstract=303547

Dan Black

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Jeffrey Andrew Smith (Contact Author)

University of Wisconsin - Madison

716 Langdon Street
Madison, WI 53706-1481
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Mark C. Berger (deceased)

University of Kentucky - Department of Economics

N/A

Brett J. Noel

American Express Company ( email )

10030 North 25th Avenue
Building 10400
Phoenix, AZ 85021
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
47
Abstract Views
1,400
PlumX Metrics