The Displacement Effect of Reemployment Bonus Programs

Carl Davidson () and Stephen Woodbury

Journal of Labor Economics, 1993, vol. 11, issue 4, 575-605

Abstract: The authors develop a partial equilibrium matching model of the labor market in order to examine whether adoption of a reemployment bonus would displace workers not offered the bonus. They examine the displacement effect for (1) unemployment-insurance-eligible workers who are offered but do not find a job in time to qualify for a bonus and (2) unemployment-insurance-ineligible workers who are never offered a bonus. The model predicts minimal displacement of the former group. But for the latter group, the model predicts an increase in unemployment duration of 0.2-0.4 week and an increase in unemployment of up to two per thousand. Copyright 1993 by University of Chicago Press.

Date: 1993
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Related works:
Working Paper: The Displacement Effect of Reemployment Bonus Programs (1990)
Working Paper: The Displacement Effect of Reemployment Bonus Programs
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