Unemployment Insurance and Reemployment among Older Workers

1. Unemployment Insurance and Reemployment among Older Workers Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research www.upjohninstitute.org Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January 19-20, 2006, National Press Club, Washington, DC.

2. Unemployment Insurance and Reemployment among Older Workers 1. Background 2. Samples and Methodology 3. Reemployment of UI Applicants by Age 4. Reemployment Earnings by Age • Reemployment Job Tenure by Age • Summary and Conclusions

3. 1. Background: Prospects for Older Workers • Rising Risk of Job Loss Farber (1997) • Greater Time to Reemployment and Earnings Loss Chan and Stevens (2001) • Smaller Share of Jobless and Higher UI Recipiency O’Leary and Wandner (2001) • Older and Longer Job Tenure, Human Capital Loss BLS (2004) • Among UI applicants, how do older and younger Beneficiaries, non-Beneficiaries, and Exhaustees fare in terms of employment, earnings, and job stability?

4. Age Distribution of Labor Force, Unemployment, and UI Receipt in the United States, 2002

6. 2. Sample and Methodology • UI Applicants in Ohio, 2001 • Three years of quarterly follow-up data • Data on Characteristics and Quarterly Earnings • Descriptive Transition Matrices • Based on Quarterly Earnings Records (Employment, Earnings, Employer Stability)

9. 3. Reemployment of UI Applicants by Age • Ohio UI Beneficiaries • Older have lower re-employment rates • Ohio non-UI Beneficiaries • Delay in re-employment greatly reduces subsequent probability of employment • Ohio UI Exhaustees • Recover from low early rates of reemployment

21. 3. Policy Issues on Employment • UI Applicants who gain speedy return to work have a greatly increased chance of steady future employment. • Employment handicap is particularly pronounced for non-UI Beneficiaries. • Employment recovery is delayed for exhaustees. • Those gaining reemployment more quickly are harmed less by job loss.

22. 4. Reemployment Earnings by Age • Relative to earnings before UI Application • Earnings for older UI Beneficiaries are lower and recover less when reemployment is delayed • Reemployment earnings for older non-UI Beneficiaries recover to exceed prior earnings • Reemployment earnings of older UI exhaustees recover slower and less than younger UI exhaustees

28. 4. Policy Issues on Earnings • Delay in reemployment delays earnings recovery • Non-beneficiaries gaining reemployment show earnings gains • Older UI exhaustees do not return to prior earnings levels • Early reemployment of Applicants

29. 5. Reemployment Job Tenure by Age • Older UI Applicants who gain reemployment establish firmer attachments to hiring employers • Employer attachment is stronger for those gaining reemployment sooner

36. 6. Summary and Conclusions • UI Beneficiaries – Older have lower re-employment rates • non-UI Beneficiaries – Delay in re-employment greatly reduces probability of employment • UI Exhaustees – Recover quickly from low early rates of reemployment • Earnings recovery is lower among older UI Applicants • Employer attachment is stronger among older applicants gaining reemployment • Early reemployment efforts could benefit all categories of UI applicants

37. Unemployment Insurance and Reemployment among Older Workers Randall W. Eberts and Christopher J. O’Leary W. E. Upjohn Institute for Employment Research www.upjohninstitute.org Prepared for the National Academy of Social Insurance conference “Older and Out of Work: Jobs and Social Insurance for a Changing Economy,” January 19-20, 2006, National Press Club, Washington, DC.