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

Gerard van den Berg, Barbara Hofmann and Arne Uhlendorff
Additional contact information
Barbara Hofmann: FEA Nuremberg

No 9626, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 a vacancy referral increases the transition rate into work and that such accepted jobs go along with lower wages. We also find a positive effect of a vacancy referral on the probability of reporting sick. This effect is smaller at high durations, which suggests that the relative attractiveness of vacancy referrals increases over the time spent in unemployment. Overall, around 9% of sickness absence during unemployment is induced by vacancy referrals.

Keywords: unemployment insurance; wage; physician; vacancy referrals; unemployment; monitoring; moral hazard (search for similar items in EconPapers)
JEL-codes: C21 C41 J64 J65 (search for similar items in EconPapers)
Pages: 56 pages
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 (12)

Published - revised version published as 'Evaluating Vacancy Referrals and the Roles of Sanctions and Sickness Absenc' in: Economic Journal, 2019, 129, 3292-3322

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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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