Presents findings of the New Jersey Unemployment Insurance Reemployment Demonstration Project, which used random assignment and benefit-cost analysis to identify which services under the Unemployment Insurance (UI) system were most effective in expediting the return of UI claimants to the labor force.

“The purpose of the New Jersey Unemployment Insurance Reemployment Demonstration Project (NJUIRDP) was to examine whether the Unemployment Insurance system could be used to identify displaced workers early in their unemployment spells and to provide them with alternative, early intervention services to accelerate their return to work. Three packages of services, or treatments, were tested in the demonstration: (1) job-search assistance only, (2) job­search assistance combined with training or relocation assistance, and (3) job-search assistance combined with a cash bonus for early reemployment. A key component of the demonstration was that eligible claimants were identified and services were provided through the coordinated efforts of the Unemployment Insurance (UI), Employment Service (ES), and Job Training Partnership Act (JTPA) systems. Another key element was that claimants were required by UI to report for services; failure to report could have led to the denial of benefits” (p.ix).

The study used random assignment to assess the impact of the three packages of services on study participants’ UI receipt, employment, and earnings three to four years after their initial UI claim.. A total of 8,675 UI claimants were randomly assigned to one of the three treatment groups and 2,385 UI claimants were assigned to the control group (p.1). The study also included a benefit-cost analysis to determine whether the interventions resulted in a net benefit to society, the study participants, and the implementing Department of Labor agencies.

The report is organized into five chapters:

Chapter I introduces the study and discusses the treatments offered to study participants.

“Chapter II presents [the study’s] estimates of the impacts of the demonstration on UI receipt by the three treatment groups for four years that include the initial benefit year. It also presents impacts on the earnings of and weeks worked by the three treatment groups over the 10 quarters following the initial date of claim.

Chapter III examines the experience of individuals who received training and the experience of individuals who were excused from demonstration services due to literacy or language problems. It also assesses the impacts by subgroups of claimants.

Chapter IV updates the benefit-cost analysis to consider the impacts over the entire follow-up period.

[Chapter V] discusses the policy implications of the findings” (p.12).

(Abstractor: Author & Website Staff)

Major Findings & Recommendations

“The analysis of employment and earnings suggests that at least one treatment--the JSA plus reemployment bonus treatment--increased earnings initially, but that none of the treatments had longer-run impacts on the probability of working, the amount of earnings, or weeks worked. Employment patterns stabilized by 3 quarters after the initial date of claim, but earnings levels among those who became reemployed remained below base-period levels well after their employment had stabilized. Although reemployed workers were earning more in nominal terms by the 10th quarter than they did before the UI spell, their earnings did not [keep] pace with inflation, nor with average weekly earnings in manufacturing. These findings suggest that, on average, claimants were unable to obtain reemployment in jobs with the same earnings potential as their pre-UI jobs.... [The study’s] assessment of the impacts of the treatments by subgroups of claimants suggests that the treatments had their greatest impact on individuals who had readily marketable skills and experience. This finding suggests that the treatments should be provided to a wide range of claimants, including those with relatively good reemployment prospects. The results of the benefit-cost analysis suggest that all three treatments offered net benefits to society as a whole and to claimants relative to existing services. The JSA-only treatment and the JSA plus reemployment bonus treatment also led to net gains to the government sector as a whole and to the Labor Department agencies. The JSA plus training or relocation treatment was expensive for the government sector. These findings suggest that it may be possible to fund the JSA-only and the JSA plus reemployment bonus treatments from the savings in UI benefits and increased UI tax collections. [The authors’ estimates indicate that the JSA-only treatment would pay for itself from the perspective of the Labor Department, while the JSA plus reemployment bonus treatment would lead to modest net benefits for the Labor Department. On the other hand, the JSA plus training or relocation treatment could not be funded solely from the savings in UI benefits and increased UI tax collections. It would require either that funding for other programs be reduced or that taxes be increased, since it appears to create net costs to the government as a whole" (p.x-xi). (Abstractor: Author)