Working Paper: NBER ID: w8825
Authors: Dan A. Black; Jeffrey A. Smith; Mark C. Berger; Brett J. Noel
Abstract: This paper examines the effect of the Worker Profiling and Reemployment Services (WPRS) system. This program 'profiles' UI claimants to determine their probability of benefit exhaustion (or expected spell duration) and then provides mandatory employment and training services to claimants with high predicted probabilities (or long expected spells). Using a unique experimental design, we estimate that the WPRS program reduces mean weeks of UI benefit receipt by about 2.2 weeks, reduces mean UI benefits received by about $143, and increases subsequent earnings by over $1,050. Much (but not all) of the effect results from a sharp increase in early exits from UI in the experimental treatment group compared to the experimental control group. These exits coincide with claimants finding out about their mandatory program obligations rather than with actual receipt of employment and training services. While the program targets those with the highest expected durations of UI benefit receipt, we find no evidence that these claimants benefit disproportionately from the program. In addition, we find strong evidence against the 'common effect' assumption, as the estimated treatment effect differs dramatically across quantiles of the untreated outcome distribution. Overall, the profiling program appears to successfully reduce the moral hazard associated with the UI program without increasing the take-up rate.
Keywords: Unemployment Insurance; Reemployment Services; Worker Profiling; Experimental Evidence
JEL Codes: H0; J6; C9
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| awareness of mandatory obligations (K29) | decision to exit unemployment insurance (J65) |
| treatment effect varies across different quantiles of the outcome distribution (C32) | common effect assumption (C20) |
| profiling scores (C52) | treatment impact (C22) |
| WPRS program (I38) | mean weeks of unemployment insurance benefit receipt (J65) |
| WPRS program (I38) | mean benefits received (H55) |
| WPRS program (I38) | subsequent earnings (E25) |
| WPRS program (I38) | early exits from unemployment insurance (J65) |