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What can the UK learn from the Nevada reemployment programme?

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In July, the UK Government launched its Plan for Jobs. This aims to mitigate the labour market impacts of the COVID-19 pandemic by supporting, protecting and creating jobs. One of the measures announced was a doubling of the number of work coaches in Jobcentre Plus by the end of 2020. Work coaches provide tailored support to help unemployed people find a job.

A programme from the US – the Reemployment and Eligibility Assessment (REA) – provides useful insights into why this £895 million investment could be important.

What was the REA programme and what was its impact?

REA programmes were initially implemented across nine US states to mitigate the labour market impacts of the 2008-09 recession, with the programme extended to 33 states by 2011. In each state, the REA assessed eligibility for unemployment insurance. One state – Nevada – also required participants to engage with reemployment services such as receiving labour market information, developing a personalised reemployment plan, assistance with jobs search and CVs and referrals to job training. This is similar to the support that is provided by Jobcentre Plus work coaches. Whilst some other states encouraged participants to make use of reemployment services, only Nevada made them compulsory. Nevada´s approach also differed from REA programmes in other states in that the same staff provided both eligibility assessments and reemployment services. In other states, those undertaking eligibility assessments usually referred applicants to a different office for reemployment services.

In 2009, the Department of Labor (DOL) commissioned the first evaluation of the REA programmes implemented in Florida, Idaho, Illinois, and Nevada. Only the Nevada REA programme had positive impacts on participants’ earnings and employment.

The key findings are: 

  • Participants in Nevada’s REA programme were 10 percentage points less likely to exhaust their unemployment insurance benefits relative to non-participants, with similar findings for Emergency Unemployment Compensation (EUC, which are benefits to individuals who have exhausted regular UI state benefits) benefits.
  • The programme reduced unemployment insurance and EUC duration, as well as the unemployment insurance and EUC benefits collected.
  • There was a large and sustained effect on the earnings of participants.Total earnings of participants were 18 percent ($2,611) higher than those of non-participants in the six quarters after starting to claim unemployment insurance. 

A recent study examined whether the Nevada REA programme had long-lasting effects. Manoli, et. al. (2018) find that the programme increased earnings and employment for at least eight years after programme participation.

The programme has been re-assessed (again through an RCT) to test whether results hold under different economic conditions. Findings from an interim report look promising.

Why was Nevada REA programme successful?

Michaelides and Mueser (2018) examine whether the two requirements of the Nevada REA programme – the eligibility assessment and reemployment services – explain the programme’s success. Individuals assigned to the treatment group had to attend a one-on-one meeting with the programme staff at the beginning of their unemployment insurance spell (so they were subject to programme requirements), while these requirements did not apply for individuals assigned to the control group (they just were subject to the usual UI rules). In that meeting, programme staff checked whether applicants were qualified for receiving the benefits and if they were actively searching for a job. If individuals were considered eligible for REA, they were provided with services aimed at increasing their probability of getting a job based on individual needs and including direct referral to job openings. Michealides and Mueser find that reviewing eligibility at an early stage prevents the programme from supporting individuals who failed to meet unemployment insurance eligibility requirements at an early stage. Specifically, ineligible individuals are likely to voluntarily exit unemployment insurance to avoid programme requirements and disqualifications. They find that these ‘moral hazard effects’ were important.

They also find that a large number of participants exit from unemployment insurance after the interaction with the programme ended, which implies that the mandatory reemployment services helped the unemployed in getting a job. In other words, these ‘service effects’ play a role in the success of the programme. Combined, this suggests that the interaction of these two requirements complement each other and help make the policy successful.

In a second paper, Michaelides and Mueser (forthcoming) compare the effectiveness across four reemployment programmes carried out in three states (two in Florida, Idaho, and Nevada). These four reemployment programmes had different requirements. One of the programmes in Florida involved light touch reemployment services (orientation meeting in public employment office to receive information and referrals services), and it had the smallest impact on employment and earnings. The other programme in Florida and the programme in Idaho involved a review of eligibility, followed by participants providing information about their job search activities. Both had larger impacts on employment and earnings than the light-touch Florida programme. The Nevada programme, which involved a review of eligibility and compulsory reemployment services had the largest and longest-term effects on employment and earnings. The evidence from this study suggests that reemployment programme which carries out an (early) eligibility review plus compulsory job services focused on enhancing job search is the most effective approach. 

What lesson can we take away from Nevada REA for UK work coaches?

Given that the evidence from Nevada REA suggests that reemployment services reduced the time participants were unemployed following the 2008-09 recession and increased their employment and earnings over the longer term, the expansion of work coaches is likely to help reduce the long-term effects of the current crisis on those that have become unemployed.