Imposed Benefit Sanctions and the Unemployment-to-Employment Transition: The German Experience

Kai-Uwe Müller and Viktor Steiner

No 792, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We analyze the effect of imposed benefit sanctions on the unemployment-to-employment transition of unemployed people entitled to unemployment compensation on the basis of register data from the German Federal Employment Agency. We combine propensity score matching with a discrete-time hazard rate model which accounts for the dynamic nature of the treatment. We find positive short- and long-term effects of benefit sanctions which are robust for men and women in East and West Germany. The effects diminish with the elapsed unemployment duration until a sanction is imposed. The limited use of benefit sanctions can thus be an effective activation tool if they take place not too late in an individual's unemployment spell.

Keywords: benefit sanctions; unemployment transitions; German labor market reform; ex-post evaluation; propensity score matching; hazard rate model; unobserved heterogeneity (search for similar items in EconPapers)
JEL-codes: J64 J65 H31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: Written 2008
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Persistent link: http://EconPapers.repec.org/RePEc:diw:diwwpp:dp792

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