THE IMPACT OF REEMPLOYMENT BONUSES ON INSURED UNEMPLOYMENT IN THE NEW-JERSEY AND ILLINOIS REEMPLOYMENT BONUS EXPERIMENTS

Separate social experiments conducted in New Jersey and Illinois teste d the effect of offering Unemployment Insurance (UI) claimants a cash bonus for rapid reemployment. The Illinois bonus was constant over tim e, while the New Jersey bonus declined over time, so that the bonus re ceived was greater the earlier that reemployment occurred. This paper compares the effects of the bonus offers on the rate at which claimant s exited UI. The New Jersey and Illinois bonus offers generated simila r increases in the UI exit rate during the period in which claimants c ould qualify for the bonus. However, the declining New Jersey bonus ha d little impact on long-term claimants who exhausted their UI benefits . In contrast, the constant Illinois bonus had a substantial impact on long-term claimants, thereby reducing the rate at which claimants exh austed their UI benefits. This finding at least partly explains why th e Illinois bonus had a larger impact on UI receipt than the New Jersey bonus.