Title

Poor Performance as a Predictable Outcome: Financing the Administration of Unemployment Insurance

Author(s)

Marta Lachowska Marta Lachowska (W.E. Upjohn Institute for Employment Research)

Alexandre Mas Alexandre Mas (Princeton University)

Stephen A. Woodbury Stephen Woodbury (Michigan State University)

Abstract

Effective administration of unemployment insurance (UI) is central to its ability to smooth consumption and act as an automatic stabilizer. The federal government’s method of allocating funds to administer UI gives the states no incentive to provide quality service at reasonable cost. We first document the deteriorating performance of the UI system in recent recessions and present estimates of a descriptive model relating state workloads to performance. We then characterize UI administration as a standard principal-agent problem, which leads to a method of allocating funds that would motivate states to adopt new technologies and improve performance.

Creation Date

2022-01

Section URL ID

Paper Number

653

URL

https://dataspace.princeton.edu/bitstream/88435/dsp01v405sd53v/3/653.pdf

File Function

Jel

E24, J65

Keyword(s)

unemployment insurance, government

Suppress

false

Series

1