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TRIM’s Unemployment Compensation (UC) Module is designed to correct for the underreporting of UC in the CPS data, capture the additional UC benefits that will be paid when unemployment increases, and capture the impact of changes in UC rules (extended benefits, supplemental payments) for both baseline UC recipients and new UC recipients in an alternative simulation. Key points in the UC module’s design include:
The UC module first determines categorical eligibility for UC based on a worker’s sector of employment. Second, variables necessary to calculate monetary eligibility are estimated. Third, monetary eligibility is determined. Fourth, weeks of benefit receipt are assigned. Fifth, any additional provisions such as a temporary additional UC supplement are added to potential benefits. Sixth, participation is determined. Finally, monthly amounts are assigned. Each step, when possible, will capture some of the important variation in UC rules across states. Below, for each step, the real-world rules are summarized, and the proposed design is presented. Differences in operation between baseline simulations and alternative simulations are noted. The following sections provide details on the design of the UC Module:
Categorical EligibilityIn general, workers qualifying for UC must have lost their job through no fault of their own (“good cause”) and must be able-bodied, available to work, and actively seeking work. Workers from certain sectors do not qualify for UC, while these sectors can vary from state-to-state they generally include: the self-employed, insurance and real-estate agents on commission, volunteers, part-time work for nonprofit organizations, student nurses and interns in the employ of a hospital, and students in work-study programs. A great number of exceptions and additions to this exist that occur only in a few states and affect relatively small groups. First, an individual who reported UC will be assumed to be categorically eligible for UC. Then, in determining if a non-reporter will be assigned UC in a baseline, and in modeling whether newly-unemployed people in an alternative simulation are eligible for UC, the model applies the key categorical eligibility requirements. The module begins by restricting eligibility to those over the age specified by the program rule MinAgeAdult. Because this first implementation of the UC Module requires earnings data in order to determine monetary eligibility, the module then further restricts categorical eligibility to those with LastWeeksWorked > 0. Then it further restricts categorical eligibility to individuals with any weeks of unemployment during the calendar year. Within that group, the following individuals will be considered ineligible for UC: those receiving any disability income during the year, the self-employed, railroad workers, students, and real-estate workers. These workers can be identified using CPS variables defining sector of employment, student status, and industry. At the end of the categorical eligibility test, the output variable CategoricallyEligible is set. If during the test, the worker fails the test, the debug output variable ReasonNotEligible is set with the corresponding failure code. Estimating Variables for Calculating Monetary Eligibility and Benefit AmountsA person is only eligible for UC if s/he has been sufficiently attached to the labor force. The data required to determine labor force attachment include Base Period Wages (BPW), High Quarter Wages (HQW), and Wages in the 2 Highest Quarters (2HQ)—these data are in-turn used to calculate the potential Weekly Benefit Amount (WBA). The BPW is the total earnings during the four quarters of the base period, the HQW is the total earnings for the highest quarter observed within the base period, and the 2HQ is the average one quarter earnings over the two highest quarters of earnings within the base period. In the case of individuals with survey-reported UC benefits, monetary eligibility will be assumed, and the WBA is inferred from survey-reported annual UC amounts, weeks unemployed, weeks not in labor force, and weeks part-time. However, in other cases, the UC Module estimates BPW, HQW, and 2HQ; these, then these variables used to determine the potential Weekly Benefit Amount (WBA). The module estimates the necessary monetary eligibility variables as follows, for different subgroups of individuals: UC reporters: If an individual reported receiving UC, then this person will be assumed to be both categorically and monetarily eligible. Non-reporters with no wage data: If an unemployed individual did not report any wage data (s/he was unemployed or out of the labor force the entire year), it is not possible (in this version of the UC module) to calculate monetary eligibility or a potential benefit amount. Thus, non-reporters with no CPS-reported wage data are removed from the pool of potential eligible nonreporters during the categorical eligibility test. Non-reporter, with wage data: If the unemployed individual did not report UC benefits but does have CPS-reported wage data, then the module will estimate all of these variables including BPW, HQW, 2HQ and the potential WBA. For workers with some unemployment for whom an entire year of wages were not observed, the module provides three methods, selected with the national-level program rule EligVarsEstimateMethod, to the analyst for estimating monetary eligibility variables:
Those simulated in an Alternate Scenario to have lost their job through the Job Change Module: In an alternative scenario, some may lose their job through the Job Change Module. The UC Module checks the variable list program rule JobChanged in order to determine if this person’s Input schema data has been altered. If the person was altered by Job Change then the UC Module checks to the program rule JobChangeEligVarEstimationMode to determine whether or not to recalculate the workers BPW, HQW, and 2HQ variables with Method 2 (above), or use the original data calculated during the baseline run whose method was selected them by the program rule EligVarsEstimateMethod. If JobChangeEligVarEstimationMode specifies that the monetary eligibility variables should be recalculated in the alternate scenario, then the UC Module uses the variable list program rules BaselineMonthlyEarnings and BaselineMonthlyWeeksWorked (which should be set to variables containing the original Input schema earnings data) as the monthly input data for estimating BPW, HQW, and 2HQ. In cases when BPW, HQW and 2HQ are estimated the next step is to estimate the WBA. In order to capture some of the key variation between states, the UC Module estimates the WBA based on a grouping of the state-specific formulas--the formulas, which are selected by the state-level program rule WBACalcMethod, are as follows:
Once the potential WBA is calculated using the appropriate formula, then it is subject to a state-specific minimum and maximum, which are set using the program rules MinWBA and MaxWBA. With the Two-High-Quarter Method, if a person’s estimated WBA is less than the minimum WBA for the state, the code assumes that estimates were incorrect, and the person is not considered monetarily eligible. There is also a state-level program rule by which the analyst can reduce the WBA by a parameterized percentage PercSSReductionToWBA if the unemployed worker is receiving social security. At the end of the routines to estimate monetary eligibility variables, the output variables BasePeriodWages, HighQuarterWages, TwoHighQuarterWages and WeeklyBenefitAmount are set to the values calculated. Monetary EligibilityMonetary eligibility is assumed for individuals with CPS-reported UC. For others, the module will use the values estimated earlier to simulate if an unemployed person is eligible for UC. The key characteristics of monetary eligibility were broken down into groupings based on the “primary figure and method used” for determining eligibility—the module uses five groupings: Multiple of High-Quarter Wages (HQW), Multiple of Weekly Benefit Amount (WBA), Flat Qualifying Amount, Minimum Average Wage for 2 High Quarters (2HQ), and separate threshold tests for wages in the High Quarter (HQ) and wages outside the HQ. The method to be used for each state is specified by the analyst with the program rule MonetaryEligMethod.
There is an additional parameterized state-level constraint, MonetaryEligWagesIn2Q, that if set requires a worker to have at least two quarters. Potential Benefit WeeksThe UC Module parameterizes the potential benefit weeks for regular (MaxRegUCBenefitWeeks), extended (MaxEBUCBenefitWeeks) and temporarily authorized (MaxTempAuthUCBenefitWeeks) unemployment benefit programs. Actual simulated benefit weeks for UC reporters are determined based on CPS-reported UnemploymentCompensation, observed length of the spell of unemployment or part-time employment for the worker, and state-specific minimum and maximum restrictions on WBA. If a person is unemployed for more weeks than can be covered by regular benefits, the module assigns extended and temporarily authorized unemployment benefits. These assignments are made to eligible nonreporters in the baseline and alternate scenarios and UC reporters in an alternate scenario if the total number of potential benefit weeks increased. The module limits total benefit weeks to the maximum number of eligible benefit weeks and actual benefit receipt is determined by actual weeks the worker is unemployed for eligible nonreporters. For UC reporters, benefits received is the same as UnemploymentCompensation reported in the Input schema data; this UC is allocated with preference for 1) weeks of unemployment, 2) week not in the labor force, 3) weeks working part-time, 4) weeks working full-time. Other ProvisionsThe national-level program rule FACUnemploymentCompSupplementalPayment is added to the added to calculated WBA. This program rule is useful for modeling temporary, national-level increases to unemployment compensation WBAs. The state-level program rules StateUCDepChildAllowanceVal, StateUCDepChildAllowanceType, StateUCDepChildMax, StateUCDepChildMax, and StateUCDepChildMaxAmount can be used to simulate state-specific rules for child dependent allowances. Similar rules are also provided to simulate dependent spouse allowances as well. Participation DecisionThe UC Module assumes that nearly everyone who is actually eligible for unemployment compensation applies for the benefit. However, because the module will not be able to precisely identify who is eligible for benefits (we observe only limited data on wage history, and we do not know the circumstances of a person’s job loss or if s/he has already used up her/his benefits) we expect that the total number of non-reporters we identify as eligible for UC in a baseline will exceed the total number who actually receive UC. Alignment with target administrative data can be accomplished with the regional (based on the nine Census divisions) probability of participation program rules as well as participation adjustment factors for alignment by gender, age, race/ethnicity, state, and industry. In addition, the national-level program rule ProbGoodCauseSeparation allows the analyst to provide a probability that any given worker lost their job through no fault of their own or left with “good cause.” In an alternative simulation, assuming their was not change to the probabilities of participation or eligibility criteria, those simulated to receive unemployment compensation in the baseline should also receive unemployment compensation in the alternative. Correcting for Underreporting of UC in the CPS DataA key function of the UC Module is its ability to correct for the underreporting of UC benefits in the CPS data. UC benefits are assigned to a subset of the individuals who have a spell of unemployment and who appear to qualify for benefits and are selected to participate. In addition, all survey-reported UC recipients will retain their survey-reported benefits, with one limited exception for those working 52 weeks full-time whose UC benefits or entire records were allocated by census. Assigning Monthly AmountsFor individuals with annual UC – either survey-reported or assigned in the module – the UC module creates 12 monthly amounts, MonthlyUnemploymentComp, indicating how much UC was received in each month of the year. The monthly number of weeks of UC is assigned in the variable MonthlyWeeksUnemploymentComp. For individuals with survey-reported UC, the monthly variables are created such that the individual does not receive UC for more than the maximum possible weeks and the annual amount remains the same as reported in the survey. When possible the weekly amount is within the min and max possible range in his/her state. For UC reporters, the module first calculates the estimated WBA based on the annual UC reported and the lesser of the maximum possible UC weeks and the weeks of unemployment reported. If the initially-calculated WBA is outside of the minimum and maximum possible in the person’s state, we will reset it to within that range, and we will modify the weeks of receipt as necessary. Monthly UC amounts will then be generated using the final WBA and the final weeks of receipt, starting from the first week of unemployment. The initial start month of UC receipt is randomly assigned. The analyst can specify the treatment of allocated reporters with the program rule ReporterOptions. Under the current version, with this rule the analyst has two options: 1) treat reporters of UC (allocated or not) as true reporters; or 2) remove some reported UC from workers reporting 52 weeks of full-time work and either the record or the reported UC were allocated by Census. For individuals without survey-reported UC and for those who have lost their job through Job Change, the creation of monthly UC income variables is straightforward, since there is no need to retain consistency with an already-reported amount. The person will be assumed to receive UC for the lesser of his/her weeks of unemployment and the maximum weeks of potential UC (regular plus any extensions). The benefit amount will be the WBA (computed as described above). That benefit amount will be assigned to each week, starting with the first week of unemployment. The UC Module does not model a waiting period. UC Module InputsProgram Rules SummaryGeneralSimulationMode ReporterOptions ProbUnemploymentCompReceiptLag EligibilityEligVarsEstimateMethod JobChangeEligVarEstimationMode MaxWBA MinAgeAdult MinWBA MonetaryEligMultiplier MonetaryEligMethod MonetaryEligVal1 MonetaryEligVal2 MonetaryEligWagesIn2Q PctSSReductionToWBA WBACalcMethod WBACalcMultiplier BenefitsFACUnemploymentCompSupplementalPayment MaxEBUCBenefitWeeks MaxRegUCBenefitWeeks MaxTempAuthUCBenefitWeeks ParticipationProbGoodCauseSeparation ProbPartEastNorthCentral ProbPartEastSouthCentral ProbPartMiddleAtlantic ProbPartMountain ProbPartNewEngland ProbPartPacific ProbPartSouthAtlantic ProbPartWestNorthCentral ProbPartWestSouthCentral MinWeeksLookingAdj ProbPartAge ProbPartGender ProbPartIndustry ProbPartRaceEth ProbPartState Inputs from Other SimulationsAllocFlag665 AllocUnemploymentCompAmount AllocUnemploymentCompReceipt BaselineAnnualUnemploymentComp BaselineAnnualWeeksUnemploymentComp BaselineAssignedFACUCSupplementalPayment BaselineAssignedRemainingUC BaselineAssignedUCReceived BaselineAssignedWeeklyBenefitAmount BaselineAssignedWeeksUCReceived BaselineBasePeriodWages BaselineCategoricallyEligible BaselineHighQuarterWages BaselineMonetarilyEligible BaselineMonthlyEarnings BaselineMonthlyUnemploymentComp BaselineMonthlyWeeksUnemploymentComp BaselineMonthlyWeeksWorked BaselinePotentialBenefitWeeks BaselineTwoHighQuarterWages BaselineUnemploymentCompParticipate BaselineWeeklyBenefitAmount JobChanged UC Module OutputsAnnual Regular OutputAnnualUnemploymentComp AnnualWeeksUnemploymentComp AssignedEligibleNonreporter AssignedFACUCSupplementalPayment AssignedRegion AssignedWeeklyBenefitAmount BasePeriodWages CategoricallyEligible HighQuarterWages MonetarilyEligible PotentialBenefitWeeks TwoHighQuarterWages UnemploymentCompParticipate WeeklyBenefitAmount Annual Debug OutputAssignedRemainingUC EligibilityType FirstEmploymentSpellEarnings FirstEmploymentSpellWeeks ReasonNotEligible Monthly Regular OutputMonthlyUnemploymentComp MonthlyWeeksUnemploymentComp Monthly Debug OutputMonthlyDebugFullTimeUC MonthlyDebugNILFUC MonthlyDebugPartTimeUC MonthlyDebugUnemployedUC |
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