Paul L. Burgess

The Impact of Unemployment Insurance Benefits on Reemployment Success

Examination of the relation of reemployment success to weekly unemployment insurance (UI) payments. Framework for analyzing the relationship between reservation wage and unemployment duration; Experiment performed on UI claimants in the United States; Empirical results of the study. (Abstract copyright EBSCO.)

Unemployment Insurance Overpayments: Evidence and Implications

This paper presents the principal findings of the most comprehensive study yet undertaken of payment errors in the unemployment insurance (UI) program. Among the five states studied—Illinois, Kansas, Louisiana, New Jersey, and Washington—the percentage of benefit weeks with payment errors ranged in 1981–82 from 12 percent to 52 percent, with an average of 26 percent. In each state, overpayments greatly exceeded underpayments, with inadequate job search efforts the primary cause of the overpayments found. The authors discuss the implications of their findings for previous research and for UI program administration.

Preunemployment Job Search and Advance Job Loss Notice

Preunemployment search is the fundamental labor market process generating beneficial effects of advance notice. Yet theory indicates that workers receiving notice may not search, whereas others may search even without advance notice. Our weighted results indicate that over one-third of all nonnotified workers still search and over 40% of workers receiving notice do not respond by searching. Further, preunemployment search determinants differ for notified (nonnotified) workers and men (women). For notified men, search is strongly increased by longer notice and strongly decreased by higher unemployment insurance benefits. But neither factor affects the employed search decisions of notified women.

Do negotiated and arbitrated salaries differ under final-offer arbitration?

The authors investigate whether negotiated settlements differ from arbitrated ones under final-offer arbitration. Examining the salaries of all major league baseball players eligible to participate in final-offer arbitration between 1986 and 1991, they find that arbitration awards won by players are higher and those won by management are lower than negotiated settlements for players of comparable value. This evidence suggests that arbitrated settlements are of “low quality” relative to negotiated ones, in the sense that they tend to fall outside the bounds of potential negotiated settlements. Another implication of these findings, however, is that the bargaining agents retain substantial freedom to negotiate salaries that are not determined solely by arbitrator preferences.

Employer Tax Evasion in the Unemployment Insurance Program

We use unique data to analyze employer tax compliance with Unemployment Insurance (UI) provisions. The data indicate that employers may have underreported

Reported VS. Actual Job Search by Unemployment Insurance Claimants

728 million of UI taxes nationally in 1987 alone. To formally examine this noncompliance, a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates, among other things, likely increases noncompliance by risk-neutral firms. This prediction is empirically verified. The finding that UI tax evasion is systematically related to various firm characteristics suggests that UI audits may be effectively targeted by statistical profiles derived from our model, thereby improving compliance.

How do Unemployment Insurance and Recall Expectations Affect on-the-job Search among Workers Who Receive Advance Notice of Layoff?

This study compares self-reported job search contacts of unemployment insurance recipients with independently verified job-search contacts. For the total sample, reported contacts averaged 2.61 per week compared with actual contacts of only 1.78 per week; nearly one-fifth of the sample made no job contacts for the single weeks analyzed. The separate equations estimated for reported and actual job contacts suggest that systematic misreporting may distort the conclusions-particularly for the impact of unemployment insurance benefits on search intensity-that would result from analyzing reported (rather than actual) contacts. Some implications of the findings for reported unemployment rates also are explored.

Can Prior Offers and Arbitration Outcomes Be Used to Predict the Winners of Subsequent Final-Offer Arbitration Cases?

This paper explores how advance notice of layoffs, recall (rehiring) expectations, and unemployment insurance (UI) benefits affected on-the-job search among a random sample of Arizona UI recipients in 1975–76. The analysis, which includes extensive controls for the characteristics of workers and their jobs, indicates that pre-unemployment search increased with length of notice and decreased with expected recall. Also, among workers not expecting recall, pre-unemployment search decreased with the level of UI benefits available after layoff. The authors argue that improved experience rating would encourage firms to give employees advance notice when layoffs are imminent, and re-employment bonuses for workers with zero or short unemployment spells would encourage early search.

An Incentives Approach to Improving the Unemployment Compensation System.

The purpose of interest arbitration is to encourage bargainers to negotiate their own mutually agreeable settlement. In final-offer arbitration (FOA), the bargainers exchange final offers. If a settlement is not reached, an independent arbitrator selects one of the final offers as the award. At the beginning of each arbitration period, the only information available to bargainers relating to arbitrator preferences is past outcomes. Given its goal of driving negotiated settlements, an effective FOA process requires bargainers to infer useful information about arbitrator preferences from past outcomes. Using data from major league baseball, this article provides evidence that past FOA decisions are positively correlated with the outcomes of future FOA cases.