The Effectiveness of Reemployment Programs during the Great Recession: Experimental Evidence from Three States
Thursday, November 12, 2015 : 2:05 PM
Orchid A (Hyatt Regency Miami)
*Names in bold indicate Presenter
This paper presents experimental evidence on the effectiveness of four reemployment programs implemented during the Great Recession: (1) Florida PREP, which referred new UI recipients to a local employment office to receive information about available reemployment services; (2) Florida REA, which required new UI recipients to undergo an in-person UI eligibility review to confirm that they were conducting an active job search; (3) Idaho REA, which required new UI recipients to complete an on-line UI eligibility review; and (4) Nevada REA/RES, which required new UI recipients to undergo an in-person eligibility review and receive individual job counseling services. These programs represent a wide range of reemployment programs implemented throughout the U.S. during the recession. Results show that the four programs were effective in reducing UI duration, producing UI savings that exceeded program costs, and – with the exception of Florida PREP – improving participant reemployment outcomes. However, Nevada REA/RES had significantly larger effects than Florida REA and Idaho REA, while Florida PREP was the least effective of the four programs. Additional analyses show that the Florida PREP, Florida REA, and Idaho REA effects are entirely attributable to moral hazard – program requirements increased the opportunity cost of UI, pushing some participants to exit UI early in their claims. The Nevada REA/RES effects were partly attributable to moral hazard, but the largest portion of the effects was because the individual counseling services were themselves effective in enhancing participant job search. These findings provide important insights on the efficacy of U.S. reemployment programs during the recession. Programs that did not require participants to undergo the eligibility review or receive individualized services had moral hazard effects only. Programs that required participants to undergo a UI eligibility review were very effective in reducing moral hazard and producing UI savings, but not necessarily in helping participants achieve better reemployment outcomes. Finally, programs that combined the UI eligibility review with individual counseling services were very effective in achieving both objectives, leading to higher overall effects.