Volume 5, Number 2 (Spring) 1970
Munts, Raymond. 1970. "Partial Benefit Schedules in Unemployment Insurance: Their Effect on Work Incentive." Journal of Human Resources 5(2):160-176.
If the earnings of otherwise qualified workers fall below certain specified levels, these workers are paid unemployment insurance benefits, although in smaller amounts than when they are fully unemployed. State-to-state variation in these partial benefit schedules is studied here for the differential effects of behavior. The hypothesis is a rational, economic one--that workers adjust their part-time work to serve their interests under these schedules. Data from Wisconsin confirm this view, at least under conditions where a small increment in earnings brings a sudden drop in income from benefits and earnings combined. The policy implication is that minimizing work disincentive, as well as the criteria of simplicity and administrative convenience, should figure in the construction of partial benefit schedules. In particular, the schedules should be rewritten to avoid a sudden drop in the worker's income during his transition from full unemployment to full employment. The schedules should allow higher earnings than at present so as to permit gradual reduction in benefits as earnings increase and to keep rising income correlated with greater effort.
The author is Professor of Social Work, University of Wisconsin, and Assistant Director of the University's Institute for Research on Poverty. The author wishes to acknowledge his indebtedness for help and suggestions from Ralph Altman, Robert Lampman, James Lyday, Oren Reich, and Harold Watts. The research reported here was supported by funds granted to the Institute for Research on Poverty at the University of Wisconsin by the Office of Economic Opportunity pursuant to the provisions of the Economic Opportunity Act of 1964. The conclusions are the sole responsibility of the author.
© 2003 by the Board of Regents of the University of Wisconsin System
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