Summary and Policy Implications
نویسنده
چکیده
The UI bonus experiments were conceived just after unemployment in the United States had reached a post–World War II high. In 1982 and 1983, for example, the civilian unemployment rate was nearly 10 percent (Council of Economic Advisers 1999). During the 1960s, the unemployment rate averaged under 5 percent and during the 1970s, it averaged just over 6 percent. High unemployment, coupled with a growing consensus among academics and policy analysts that the UI program exacerbated unemployment by reducing the incentive to become reemployed, prompted policymakers to search for alternative ways to help lower unemployment. Offering a bonus was a novel idea. It was thought that a bonus, if structured properly, could partially offset the financial disincentives of the UI system and reduce unemployment. Economic theory provided an unambiguous prediction about the impact of a bonus on the length of an unemployment spell. Basic jobsearch theory implies that if a time-limited offer of a bonus is extended to UI recipients, a number of them would respond by finding employ-
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