Reemployment Bonuses And Profiling

Upjohn Institute Working Paper 98-51

Christopher J. O'Leary, Paul Decker, and Stephen A. Wandner

November 1997

Abstract

Earlier research has indicated that an untargeted reemployment bonus program would not be good public policy. 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. The targeting of offers to the unemployment insurance (UI) claimants identified as most likely to exhaust benefits is estimated to increase cost effectiveness. However, estimated average benefit payments do not steadily decline as the eligibility screen is gradually tightened. Furthermore, targeting does not guarantee that bonus offers will be cost effective. The best candidate to emerge for a targeted reemployment bonus is a low bonus amount, with a long qualification period, targeted to the half of profiled claimants most likely to exhaust their UI benefit entitlement.

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