Incentives Approach to Improving the Unemployment Compensation System

Overpayments may account for up to 15 percent of all payments made under the unemployment compensation system. Burgess and Kingston propose that this overpayment serves as a clue to the more serious problems residing in the system. The authors focus on the lack of incentives (or the existence of disincentives) for improvement within the UC program structure for all participants - claimants, employers, and state UC agencies. Other issues they explore include the excessive complexity of the system and the difficulty of effectively monitoring claimant compliance with eligibility criteria.