The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions

Gerard Van den Berg, Arne Uhlendorff and Barbara Hofmann

No 11039, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Unemployment insurance agencies may combat moral hazard by punishing refusals to apply to assigned vacancies. However, the possibility to report sick creates an additional moral hazard, since during sickness spells, minimum requirements on search behavior do not apply. This reduces the ex ante threat of sanctions. We analyze the effects of vacancy referrals and sanctions on the unemployment duration and the quality of job matches, in conjunction with the possibility to report sick. We estimate multi-spell duration models with selection on unobserved characteristics. We find that vacancy referrals increase the transition to work and that these jobs go along with a lower wage. However, we also find a positive effect of receiving a vacancy referral on the probability of reporting sick. This effect is smaller at high durations, which suggests that the value of a vacancy referral increases over the time spent in unemployment. Overall, around 9% of sickness absence during unemployment is induced by vacancy referrals.

Keywords: Monitoring; Moral hazard; Physician; Unemployment; Unemployment insurance; Vacancy referrals; Wage (search for similar items in EconPapers)
JEL-codes: C21 C41 J64 J65 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-hea, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: The role of sickness in the evaluation of job search assistance and sanctions (2017)
Working Paper: The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions (2016)
Working Paper: The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions (2016)
Working Paper: The role of sickness in the evaluation of job search assistance and sanctions (2016)
Working Paper: The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions (2016)
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