Strengthening Enforcement in Unemployment Insurance: A Natural Experiment

Patrick Arni () and Amelie Schiprowski
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Patrick Arni: University of Bristol

No 10353, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Enforcing the compliance with job search obligations is a core task of conditional benefit systems like unemployment insurance (UI) or welfare. For targeted policy design, it is key to understand how the enforcement regime affects job search outcomes. This paper provides first estimates that separately identify the effects of increasing enforcement strictness in UI. As a natural experiment, we exploit a reform which induced a sharp and unanticipated increase in the probability of being sanctioned after the failure to document job search effort. Using a difference-in-differences design, we find that the probability of job finding within six months increases by 6 percentage points in response to the policy change. This effect comes at the cost of lower job stability. As a consequence, early job finders experience losses in total earnings driven by fewer months in employment within the considered post-unemployment period. We use these estimates to quantify the elasticities to changes in enforcement strictness, trading off the short-run gains (job finding) against the mid-run costs (job quality).

Keywords: unemployment insurance; job search; natural experiment; enforcement (search for similar items in EconPapers)
JEL-codes: J64 J65 J68 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2016-11
New Economics Papers: this item is included in nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Strengthening Enforcement in Unemployment Insurance: A Natural Experiment (2016)
Working Paper: Strengthening Enforcement in Unemployment Insurance. A Natural Experiment (2016)
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