Federal Oversight and Benefit Payment Accuracy: Evidence from the Unemployment Insurance System

Abstract

States with high unemployment insurance improper payment rates measured by the Benefits Accuracy Measurement (BAM) statistical survey see increased federal oversight via corrective action plans. Using a regression discontinuity methodology comparing states with improper payment rates just above and below the threshold for increased federal scrutiny, I find that the BAM program and associated federal action have limited impact on future improper payments or work-search-related investigations. However, detections of earnings-related non-fraud rise in the immediate aftermath of having a high improper payment rate, and there is some evidence of processing delays and reduced recipiency rates.