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Modeling Financial Incentives to Get Unemployed Back to Work

Jan Boone and Jan van Ours ()

No 973, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. In our analysis we find that not only micro effects concerning the behavior of individual unemployed workers are relevant, but also macro-spillover effects from the additional creation of vacancies, which originates from the increased effectiveness of labor supply. We advocate that for a given loss in welfare for the unemployed benefit sanctions are more effective in reducing unemployment than an across the board reduction in the replacement rate.

Date: 2000-08-01
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Working Paper: Modelling Financial Incentives To Get Unemployed Back To Work (2000) Downloads
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