Personal Reemployment Accounts: Simulations for Planning Implementation Christopher J. OLeary and...
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Transcript of Personal Reemployment Accounts: Simulations for Planning Implementation Christopher J. OLeary and...
Personal Reemployment Accounts:Simulations for Planning Implementation
Christopher J. O’Leary and Randall W. EbertsW.E. Upjohn Institute for Employment Research
300 South Westnedge AvenueKalamazoo, MI 49007
[email protected], [email protected]
www.upjohn.org
1. Introduction
Back to Work Incentive Act of 2003 (HR 444) $3.6 billion nationwide budget for 2 years Budget allocations based on share of unemployment Federal to state ($85.3 million to Georgia) State to Service Delivery Regions (SDR) Assume service use patterns in Georgia under WIA Zero, one, and two-week duration impacts imputed
2. Simulated PRAs for Georgia under HR 444
Top WPRS profiled (neither union hiring hall, nor standby) Eligible for at least 20 weeks of UI benefits PRA uniform offer of up to $3,000 Can purchase intensive, supportive and training services Cash bonus (60%) for reemployment within 13 weeks Cash bonus (40%) after 6 months continuous reemployment No second bonus if services purchased after first bonus UI exhaustees may draw weekly support payments from PRA Top 30% of profiling distribution 5 quarters of WIA: 46,855
3. Services Chosen
Table 4. Service Participation Rates for Top 30 Percent of Profiling Scores
First 13 weeks After 13 weeks
Description Participants Rate Participants Rate
Service CoordinationCustomer Service PlanIn-Depth AssessmentCounselingExpanded WorkshopRef to Support ServicesTraining
28314,836
6315,610
94983
2,289
0.00600.31660.00180.33320.00200.02100.0489
833,674
243,920
96311
1,122
0.00180.07840.00070.08370.00200.00660.0239
Total Intensive/Training 17,777 0.3794 5,221 0.1114
4. Prices for Services
Table 5. Prices for Intensive, Supportive, and Training Services
Georgia UI Claims7/1/2000 to 9/30/2001
Total Services
Cost Factors
Services Prices
Intensive Services
Service coordinationCustomer service plan
In-depth assessmentCounseling
Expanded workshop
1,05136,597
22739,661
1,074
1.01.02.02.02.0
$356$356$712$712$712
Supportive Services 3,623 3.0 $1,068
Training Services 7,024 4.0 $1,424
Note: Customer service plan is the numeraire (cost factor = 1).
5. PRA Participant Groups
Employed Period 1 –UI less than 13 weeks
Employed Period 2 – (Quarterly earnings 1, 2000, 1 )
Yes = 1(0.366)
No = 0(0.634)
Yes = 1(0.402)
E11(0.267)
E10(0.135)
No = 0(0.598)
E01(0.099)
E00(0.499)
6. Characteristics of PRA Participant Groups
UI and Demographic Summary by Bonus Qualification Groupfor the Top 30 Percent of the Profiling Distribution
GroupProportion of
sampleUI weeks
drawn Mean WBA Age > 45Lower income
E11E10E01E00
0.2670.1350.0990.499
5.75.219.223.1
266257265263
0.3240.4030.3260.434
0.1690.2250.1590.186
Total 1.000 15.6 263 0.390 0.184
7. Statewide Simulation Results
GroupProportionof sample
Bonus Costs Services SpendingExtended
compensationSpending for group
First period
Second period
First period
Second period
E11S00E11S10E11S01E11S11
0.1600.1030.0010.002
180011181800
970
1200745
00
01137
01383
00
1113629
0000
3000300029132982
E11S00E11S10E11S01E11S11
0.0850.0470.0020.002
1800110918001017
0000
01151
01305
00
1036668
0000
1800226128362990
E11S00E11S10E11S01E11S11
0.0580.0270.0020.011
0000
0000
01181
01168
00
13241060
998472643249
998165219682476
E11S00E11S10E11S01E11S11
0.2960.1120.0170.074
0000
0000
01180
01195
00
13231062
243813961515
606
2438257628382862
Total 1.000 618 269 444 121 1023 2475
7. Statewide Simulation Results—Continued
Table 11. Average cost per PRA offer and total number of potential PRA offers over two years given the Georgia PRA budget
PRA Scenario Average Cost Number of Offers
Bonus, services, exhaustee pay 1-Week Impact 2-Week Impact
$2,475$2,515$2,551
34,47333,92433,446
Bonus and purchase services 1-Week Impact 2-Week Impact
$1,452$1,491$1,528
58,76057,22355,838
Bonus only with free services 1-Week Impact 2-Week Impact
$1,040$1,086$1,131
82,03878,56475,438
8. Within State Budget Allocation Alternatives
SDR Region
Share of Georgia Budget
Percent differenceUnemployed UI claimants
123456789101112
Northern GeorgiaNorthern GeorgiaAtlantaNorthern GeorgiaNorthern GeorgiaBalance of GeorgiaBalance of GeorgiaBalance of GeorgiaBalance of GeorgiaBalance of GeorgiaCoastal GeorgiaCoastal Georgia
0.0840.0420.3790.0600.0470.0500.0650.0510.0490.0590.0590.054
0.1110.0510.3440.0660.0500.0500.0630.0540.0450.0530.0610.051
30.819.6-9.211.17.0-0.1-2.96.6-8.7-9.94.5-5.9
9. Summary of Results With Georgia grant of $85.32 million, if every PRA recipient spent the
entire $3,000 grant, then: 28,440 offers over two years
With bonuses, purchases of services, and extended UI type payments assuming a 100% acceptance of PRA offers, then: $3,000 offered to top 30%, 34,473 offers over two years with no response
One and two week duration responses would permit 33,924 and 33,446 offers Excluding payment of remaining PRA funds to UI benefit exhaustees
70% more offers could be made (58,760) Under a pure bonus PRA (free services and no exhaustee payments)
138% more offers could be made (82,038) Sensitivity of results to prices for services (Appendix spreadsheet)
Doubling prices reduces offers possible by only 20% Halving prices increases offers possible by about 20%
10. Extensions Could customers pay for their preferred bundle of services under PRA?
With bonuses less than 1% have a budget shortfall Without bonuses (services only) about 0.5% have a budget shortfall
Setting the bonus as 10 times the WBA with a minimum of $1,500 Permitted more bonus offers May have smaller distortions for low wage workers
Allocations for PRAs within states to SDR A uniform WPRS score cutoff cannot be applied state-wide Unemployment rate and insured unemployment shares differ
Entry and Displacement Effects Should be reduced by targeting offers using WPRS
Wage effects of early reemployment No effects in bonus experiments requiring 4 months reemployment An increased risk given immediate payment of 60% upon reemployment