In the 1980s, the federal government sponsored several field experiments to evaluate alternative approaches to reducing voluntary unemployment and improving the functioning of the unemployment insurance (UI) system. Four of these experiments involved the offer of bonuses to encourage more rapid return to work by UI recipients. Other experiments to enhance work search and to encourage selfemployment were also implemented. Some of these experiments emphasized the offer of "carrots" to encourage

more »

... sired behavior, while other proffered "sticks." These two approaches are described more fully in later sections. Theoretical and non-experimental empirical work had consistently found that the availability of unemployment benefits led to voluntary and unproductive reduction in work effort, thereby leading to unnecessarily high costs to the UI system. The three experiments that we describe in this study were designed to test whether offering bonuses to UI claimants would reduce voluntary unemployment. As we will show, the bonus experiments were successful in reducing the length of insured unemployment spells (see Chapter 4) and thus in reducing benefit payment costs to the UI system. They accomplished this reduction without any observed adverse effect on the quality of jobs obtained from job search (see Chapter 5), indicating that the bonus offer did not reduce effective job search activities.