Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. C. Alternative Definitions of the Base Period

09/01/2004

Most states define their standard base period as the first four of the last five completed quarters. However, some states instead use an alternative definition that includes more recently completed quarters. Including more-recent quarters of employment produces a base period that may benefit those with shorter spells or more gaps in employment. Thus, we examined the sensitivity of UI monetary eligibility to alternative definitions of the base period. The first alternative includes earnings from the four most recently completed quarters rather than earnings for the first four of the last five completed quarters. The second one includes earnings from the current quarter and the last three completed quarters. Finally, we examined what would happen to monetary eligibility if a state were to combine these definitions, and to treat someone as eligible if he or she qualified under any one of these definitions.(5)

  • Using alternative definitions of the base period affects eligibility considerably during the early quarters after TANF exit, but less so during later ones.

Following the approach of combining all definitions, including the standard definition, raises the monetary eligibility rates by up to 9 percentage points in Phoenix, Baltimore County, and Tarrant County, during the first quarter and around 6 percentage points thereafter over the two-year period after TANF exit. At 4 and 6 percentage points respectively, the UI eligibility gains are somewhat lower in Cook County and in Philadelphia, but they remained uniform throughout the two-year period after TANF exit (Figure V.3). Overall, the approach of using alternative definitions of the base period does not seem to affect the fraction of former TANF recipients who would ever attain monetary eligibility over the two-year period after TANF exit (Figure V.4).

If we were to use one of the alternative base periods alone, instead of combining it with the other definitions, again, a larger number of those who leave TANF for work would become eligible for UI more quickly, as seen in Figure V.3. However, this change also would have little effect on the fraction ever eligible for UI (Figure V.4).

Figure V.3.
Sensitivity of UI Monetary Eligibility in Any Given Quarter after TANF Exit to Alternative Definitions of the Base Period
Sensitivity of UI Monetary Eligibility in Any Given Quarter after Tanf Exit to Alternative Definitions of the Base Period
Sensitivity of UI Monetary Eligibility in Any Given Quarter after Tanf Exit to Alternative Definitions of the Base Period
Source: Calculations from administrative records from selected Welfare-to-Work evaluation study sites, and state UI program rules, assembled by Mathematica Policy Research, Inc.

Note: The standard definition of base period pertains to counting earnings from the first four of the past five completed quarter, alternative rule 1 pertains to earnings from the last 4 completed quarters, and alternative rule 2 pertains to earnings from the current and past 3 completed quarters.

Figure V.4.
Sensitivity of Cumulative UI Monetary Eligibility to Alternative Definitions of the Base Period
Sensitivity of Cumulative UI Monetary Eligibility to Alternative Definitions of the Base Period
Sensitivity of Cumulative UI Monetary Eligibility to Alternative Definitions of the Base Period
Source: Calculations from administrative records from selected Welfare-to-Work evaluation study sites, and state UI program rules, assembled by Mathematica Policy Research, Inc.

Note: The standard definition of base period pertains to counting earnings from the first four of the past five completed quarter, alternative rule 1 pertains to earnings from the last 4 completed quarters, and alternative rule 2 pertains to earnings from the current and past 3 completed quarters.

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