How Effective Are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit
Patrick Arni (),
Rafael Lalive and
Jan van Ours
No 4509, IZA Discussion Papers from Institute of Labor Economics (IZA)
Abstract:
This paper provides a comprehensive evaluation of benefit sanctions, i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect.
Keywords: unemployment duration; benefit sanctions; competing-risk duration models; earnings effects (search for similar items in EconPapers)
JEL-codes: J64 J65 J68 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2009-10
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)
Published - revised version (including technical online appendix) published in: Journal of Applied Econometrics, 2013, 28 (7), 1153–1178
Downloads: (external link)
https://docs.iza.org/dp4509.pdf (application/pdf)
Related works:
Journal Article: HOW EFFECTIVE ARE UNEMPLOYMENT BENEFIT SANCTIONS? LOOKING BEYOND UNEMPLOYMENT EXIT (2013)
Working Paper: How effective are unemployment benefit sanctions? Looking beyond unemployment exit (2009)
Working Paper: How Effective are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit (2009)
Working Paper: How Effective are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp4509
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().