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

Kai-Uwe Müller () and Viktor Steiner ()
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Kai-Uwe Müller: DIW Berlin
Viktor Steiner: Free University of Berlin

No 3483, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: H31 J64 J65 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-05
New Economics Papers: this item is included in nep-eec and nep-lab
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Citations: View citations in EconPapers (28)

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