Effects of Unemployment Insurance Work-Search Requirements: The Maryland Experiment

Abstract

This paper describes findings from a 1994 experimental evaluation of alternative work-search requirements in the Unemployment Insurance (UI) program. Requiring additional employer contacts or verification of contacts reduced UI receipt by one week and $115 per claimant. Because these additional requirements did not entail additional re-employment services, the UI spell reduction can be attributed to increased non-monetary costs for remaining on UI. A job-search workshop requirement reduced UI receipt by half a week and $75 per claimant, and additional results indicate that the effects were due to increased costs of continued UI receipt rather than to enhanced job-search productivity. These treatments did not affect employment or earnings, implying that reduced UI duration led to more intensive job search, rather than a reduction in the reservation wage. In contrast, elimination of the employer contact requirement increased UI receipt and post-UI earnings, suggesting that delayed exit from UI improved job matches.he Unemployment Insurance (UI) program is designed to provide temporary income support to involuntarily unemployed individuals while they search for work. Although the UI program provides only temporary income support for the involuntarily unemployed, it can reduce the incentive to seek employment because UI benefits reduce the cost of being unemployed, resulting in an increase in the reservation wage and longer spells of unemployment. To partially offset the negative impact UI benefits have onjob search, state UI programs typically impose work-search requirements for continued benefit receipt.

Does Job Search Monitoring Intensity Affect Unemployment? Evidence from Northern Ireland

“…Results are presented in column 2 of Table 5 and again show a clear, statistically and economically significant positive impact of monitoring withdrawal on the JSA stock. The magnitude of the panel estimate -with the JSA stock increased by an estimated 12% during zero monitoring -is larger than the average of the DID estimates presented in the previous section, but still very much in line with the 10% increase in UI spell duration found by Klepinger et al (2002). The post-refurbishment J&B regime, with enhanced job search assistance and monitoring compared to the original pre-refurbishment regime, has a negative impact on the JSA stock as we would expect, leading to a 13% fall.…”

“…Anderson (2001) notes that this represents a 10% difference in average UI claim duration when comparing the zero monitoring and tough monitoring regimes. Klepinger et al (2002) find a similar effect of increasing search requirements with no change in monitoring.…”

“…This is similar in magnitude to what the estimated monitoring impact on the average duration of UI claims implies for the number of UI recipients in the Klepinger et al (2002) study. 6 So, like Klepinger et al (2002) but unlike Ashenfelter et al (2005), our DID estimates suggest that search monitoring matters, and with the expected sign.…”

“…In an earlier version of her paper, Anderson (2001) suggested a possible explanation for these mixed results, which is that the Ashenfelter et al (2005) experiment (discussed in an earlier version of their paper) involved monitoring changes that were just too minor to pick up. Klepinger et al (2002) also suggest right-censoring and small sample size in the Ashenfelter et al study as potential explanations for the lack of statistically significant monitoring impacts.…”

“…Further, where studies have looked for such impacts they have found contrasting results. Klepinger et al (2002) examine two experimental changes to monitoring intensityone that scraps monitoring and another that intensifies monitoring -in the US state of Maryland. The experiment reducing monitoring intensity leads to a marginally significant increase in UI claim duration of half of one week.…”