Upjohn Institute research addresses key components
of President Bush's proposed Personal Reemployment Accounts

President Bush's recently released economic stimulus plan includes a provision to help unemployed workers get back to work quickly. The provision establishes Personal Reemployment Accounts that eligible individuals can use to purchase job training and key services to help them find jobs. The balance of the account can be used as a cash reemployment bonus. The account program integrates two key elements - reemployment bonuses and early identification of those who might exhaust regular UI benefits. Since states will have discretion in designing these programs, it is critical for state administrators to understand the effect of reemployment bonuses on job outcomes and the statistical approach for identifying exhaustees.

The Upjohn Institute has conducted considerable research on these two topics. It designed and implemented the first demonstration project to test the response of workers to reemployment bonuses. It also designed and estimated one of the first statistical identification models used under the Worker Profiling and Reemployment Services system.

To help state officials and policymakers better understand these key components of the PRAs, we have listed and provided links to useful documents.

• Personal Reemployment Accounts: Simulations for Planning Implementation, Christopher J. O'Leary and Randall W. Eberts (04-110), 2004. This report provides a simulation analysis of questions relevant to implementation of PRAs by states. The analysis is done using data for the state of Georgia. Simulations rely on recent patterns of intensive, supportive, and training services use. Simulations for alternative rules setting the PRA amount and varying behavioral responses are examined. Like the legislative proposal, simulated PRA offers are targeted using WPRS models. The key question examined is, how many PRA offers can a state make given a fixed budget? Proposed and alternative rules for substate budget allocation are also examined. The framework presented in this paper allows the exploration of several behavioral responses to incentives created by the PRA.

• Cost-Effectiveness of Targeted Reemployment Bonuses, Christopher J. O'Leary, Paul Decker, and Stephen A. Wandner (WP03-51), 2003. The authors show that targeting bonus offers to UI claimants with profiling models - similar to those in state Worker Profiling and Reemployment Services (WPRS) systems - can improve their cost effectiveness. This is an update of WP98-51.

• Reemployment Bonuses and Profiling, Christopher J. O'Leary, Paul Decker, and Stephen A. Wandner (WP98-51), 1997. In this paper, profiling models similar to those in state Worker Profiling and Reemployment Services systems are used to reexamine evidence from reemployment bonus experiments.

• Unemployment Insurance and Unemployment: Implications of the Reemployment Bonus Experiments, Carl Davidson and Stephen A. Woodbury (WP96-44), 1996. The authors translate the results of the three reemployment bonus experiments that were conducted during the 1980s into 1) impacts of a 10-percentage point increase in the UI replacement rate on the expected duration of unemployment, and 2) impacts of adding one week to the potential duration of UI benefits on the expected duration of unemployment.

• Reemployment Bonuses in the Unemployment Insurance System: Evidence from Three Field Experiments, Philip K. Robins and Robert G. Spiegelman, Editors. A select group of UI researchers describes the motivation for and the design, implementation, and impacts of UI bonus experiments administered in Illinois, Pennsylvania, and Washington.
  
  • Read Chapter 1, Introduction and Background of the Reemployment Bonus Experiments, Walter A. Corson and Robert G. Spiegelman
    
  • Read Chapter 8, Summary and Policy Implications, Philip K. Robins

• Links to U.S Department of Labor Reports on Reemployment Bonus Demonstrations
  • Pennsylvania Reemployment Bonus Demonstration Final Report, Unemployment Insurance Occasional Paper 92-1, U.S. Department of Labor, ETA, UI Service (NOTE: The size of this file is 10.1 MB.)

  • The Washington Reemployment Bonus Experiment Final Report, Unemployment Insurance Occasional Paper 92-6, U.S. Department of Labor, ETA, UI Service (NOTE: The size of this file is 14.3 MB.)

  • An Analysis of Pooled Evidence from the Pennsylvania and Washington Reemployment Bonus Demonstrations, Unemployment Insurance Occasional Paper 92-7, U.S. Department of Labor, ETA. UI Service (NOTE: The size of this file is 8 MB.)

• Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois, Stephen A. Woodbury and Robert G. Spiegelman. New claimants for Unemployment Insurance were randomly assigned to one of two experiments that were designed to speed up the return to work. In the first experiment, a $500 bonus was offered to eligible claimants who obtained employment within 11 weeks. This experiment reduced the number of weeks of insured unemployment, averaged over all assigned claimants, whether or not they participated, by more than one week. In the second experiment, the $500 bonus was offered to the subsequent employer of the eligible claimant. This experiment reduced the weeks of insured unemployment for only one important group - white women - by about one week.
  
  • Woodbury, Stephen A., and Robert G. Spiegelman. 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois." American Economic Review 77(4): 513-530. This article is availble through JSTOR.

• Targeting Employment Services, Randall W. Eberts, Christopher J. O'Leary, and Stephen A. Wandner, Editors. This book offers a thorough overview of the U.S. experience with targeting reemployment services and self-employment assistance to UI beneficiaries most likely to exhaust benefits.
  
  • Read Chapter 1, Targeting Employment Services under the Workforce Investment Act, Stephen A. Wandner

• Design of the Worker Profiling and Reemployment Services System and Evaluation in Michigan, Randall W. Eberts and Christopher J. O'Leary (WP96-41), 1996. This paper summarizes work done by the Upjohn Institute for the State of Michigan to design and implement a UI profiling model, and to design an evaluation of the WPRS system effectiveness.

• Unemployment Insurance in the United States: Analysis of Policy Issues, Christopher J. O'Leary, and Stephen A. Wandner, Editors. The authors provide analyses on and recommendations for issues at the forefront of the UI policy debate. Topics include coverage, eligibility, adequacy and duration of benefits, labor market attachment, benefit financing, fraud and abuse, the intersection of UI with other income maintenance programs, federal-state relations (including devolution), and more.

• Links to information posted by government and research institutions

  • U.S. Department of Labor, ETA

  • Mathematica Policy Research

  • U.S. House Committee on Education and the Workforce: Fact Sheet

  • National Association of State Workforce Agencies