The work test for unemployment insurance (UI) recipients – Reduced time to reemployment by 1–2 quarters for permanent job losers

The work test for unemployment insurance (UI) recipients has been a central part of UI in the United States since the system began in the 1930s. In general, to be eligible for UI benefits, a claimant initially needs an adequate work history and must have lost her job through lack of work and no fault of her own. In addition, to remain eligible, the worker must be “able, available, and searching” for work—that is, must satisfy the work test.

Does requiring job seekers to be available and searching for work affect job quality? We examine the effects of this unemployment insurance (UI) work test on long-term employment outcomes. Adding administrative wage records to the Washington Alternative Work Search (WAWS) experiment, we examine effects on earnings, hours worked, employment, and job match quality in the nine years following the experiment. Among UI recipients as a whole, the effects of the work test were negligible, counter to the hypothesis that the work test may harm long-term earnings. But for permanent job losers, the work test reduced time to reemployment by 1–2 quarters, and increased job tenure with the first post-claim employer by about 2 quarters. Also, we find that the work test selected lower-wage workers into reemployment. Accordingly, the work test may be an important policy for improving the reemployment prospects of lower-wage, permanent job losers.

Chosen excerpts by Job Market Monitor. Read the whole story at Effects of the unemployment insurance work test on long-term employment outcomes