The U.S. labor market has changed significantly in many respects since the creation of the unemployment insurance (UI) program in 1935. The provision of cash benefits associated with UI has changed as well, yet the basic structure of the UI program remains the same. Due to the possibility that features of the UI program may need to keep pace with the changing nature of work, policy makers are looking to alternative measures to encourage more rapid reemployment and ensure better earnings recovery. Two proposed measures are the provision of wage insurance and/or the provision of wage supplements as a complement to UI, designed to increase the speed of reemployment and improve the wages of reemployed individuals.

This report outlines design parameters, evaluation methods, data sources, tasks, timelines and next steps for conducting a wage insurance and a wage supplement demonstration and accompanying evaluations. The report proposes key research questions related to program design and results, along with supplemental research questions gathered from the literature, feasibility analysis of the demonstrations, and discussions with an expert advisory committee and USDOL policy and program staff. Design parameters and options are outlined for each demonstration. These include program eligibility, targeting, supplement amount, duration and timing, and administrative infrastructure, and are largely based on the existing literature. The report proposes an implementation study and randomized control trial to capture the labor market impacts of the wage insurance and wage supplement demonstrations using employer records, state UI records, and survey data. Recommendations are made that a benefit/cost analysis be conducted as well. A discussion of the feasibility of the demonstrations and evaluation is included, along with precautions to ensure validity. Recommended large sample sizes and randomized control trial design, will support statistically significant results.

Organization:
Ray Marshall Center for the Study of Human Resources
LBJ School of Public Affairs
The University of Texas at Austin

Authors:
Christopher T. King
Kristie Tingle

Key Words: Wage Insurance, Wage Supplements, Unemployment Insurance benefits, randomized control trial, program eligibility, targeting, supplement amount, duration, and timing, administrative infrastructure