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Testing a Financial Incentive to Promote Re‐employment among Displaced Workers: The Canadian Earnings Supplement Project (ESP)
Author(s) -
Bloom Howard S.,
Schwartz Saul,
LuiGurr Susanna,
Lee SukWon,
Peng Jason,
Bancroft Wendy
Publication year - 2001
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.1005
Subject(s) - receipt , earnings , incentive , payment , unemployment , displaced workers , business , labour economics , demographic economics , economics , finance , accounting , economic growth , microeconomics
This article presents findings from a randomized experiment conducted in four Canadian provinces to measure the effects of a generous financial incentive that was designed to promote rapid re‐employment among workers who were displaced from their jobs by changing economic conditions. The incentive tested was an earnings supplement which, for as long as 2 years and as much as $250 weekly, would replace 75 percent of the earnings loss incurred by displaced workers who took a new lower‐paying full‐time job within six months of receiving a supplement offer. Findings from the experiment indicate that although persons offered the supplement understood its terms and conditions, only 2 out of 10 actually received supplement payments. Furthermore, the supplement offer had little effect on job‐search behavior, employment prospects, or receipt of unemployment insurance. Nevertheless, persons who received supplement payments benefited from them substantially. On average, they received payments for 64 weeks, totaling $8,705. © 2001 by the Association for Public Policy Analysis and Management.