Do Alternative Base Periods Increase Unemployment Insurance Receipt Among Low‐Educated Unemployed Workers?

Abstract

Unemployment Insurance (UI) is the major social insurance program that protects against lost earnings resulting from involuntary unemployment. Existing literature finds that low‐earning unemployed workers experience difficulty accessing UI benefits. The most prominent policy reform designed to increase rates of monetary eligibility, and thus UI receipt, among these unemployed workers is the Alternative Base Period (ABP). In 2009, the American Recovery and Reinvestment Act sought to increase use of the ABP, making ABP adoption a necessary precondition for states to receive their share of the $7 billion targeted at UI programs. By January 2013, 40 states and the District of Columbia had adopted the ABP despite the absence of an evaluation of ABP efficacy using nationally representative data. This study analyzes Current Population Survey data from 1987 to 2011 to assess the efficacy of the ABP in increasing UI receipt among low‐educated unemployed workers. We used a natural‐experiment design to capture the combined behavioral and mechanical effects of the policy change. We found no association between state‐level ABP adoption and individual UI receipt for all unemployed workers. However, among part‐time unemployed workers with less than a high school degree, adoption of the ABP was associated with a 2.8 percentage point increase in the probability of UI receipt.

Three essays on the labor market determinants of access to employee benefits

“…Although variations in monetary eligibility by educational attainment presented in the main analysis may seem small, barriers due to monetary eligibility are compounded by barriers due to non-monetary eligibility and lack of knowledge of the UI program. Gould-Werth and Shaefer (2013) find that the criteria of being a job leaver versus a job loser and lack of knowledge about the availability of benefits both contribute to lower rates of UI receipt for less-educated workers.…”

“…Of greater concern is access to UI among less-educated workers who often work in low-wage jobs (Gould-Werth & Shaefer, 2013;. 6 Low-wage earners must work more hours to have the same earnings as high-wage earners, but they are also more likely to have non-traditional work hours, experience fluctuations in work hours from week to week, and experience unpaid work absences (Hill & Ybarra, 2014;Kahne & Mabel, 2010;Murnane, Bernhardt, & Appelbaum, 2003).…”

“…In most cases part-time workers are subject to the same earnings and work history requirements as full-time workers (NELP, 2004). 7 Several studies have found part-time work to be a barrier to UI among the unemployed GAO, 2007;Gould-Werth & Shaefer, 2013;.…”

“…In order to receive the first half of their share of the $7 billion dollar stimulus funds, states were required to adopt an alternative base period (ABP) when making eligibility determinations. 8 These policy changes were intended to expand access to UI, but there is limited evidence as to whether this occurred (Gould-Werth & Shaefer, 2013;O'Leary, 2011;. I are particularly interested in whether expansions of monetary eligibility criteria through states' adoptions of the alternative base period rule reduced wage and work history barriers to UI.…”

“…Approximately 19 programs in the UI system had adopted ABP rules prior to the Great Recession. Following the EUC08 legislation, an additional 21 states or territories adopted ABP rules (Gould-Werth & Shaefer, 2013;O'Leary, 2011). Only ten states do not have ABP rules: Alabama, Arizona,Florida,Indiana,Mississippi,Missouri,North Dakota,Pennsylvania,Texas,and Wyoming.…”