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Impact of welfare sanctions on employment and benefit receipt: Considering top-up benefits and indirect sanctions

Ingrid Hohenleitner and Katja Hillmann

No 189, HWWI Research Papers from Hamburg Institute of International Economics (HWWI)

Abstract: This comprehensive study on UB-II-sanctions in Germany, applying PSM, presents the ex-post effects of welfare sanctions on several employment states for diverse (sub-)groups of employable welfare recipients. Besides unemployed, we also regard employed, and indirectly affected household members. The monthly updated ATT show the development of the sanction effect over two years. We find sanction effects as highly volatile over time and strongly dependent on individual factors and on circumstances like the timing of the sanction. In total, we suppose tendentially positive effects on the probabilities to enter employment and to exit welfare, at least in the short run. The positive effects tend to work stronger in the short run, and the negative effects tend to work stronger in the medium and long run. Hence, the shorter the time horizons of studies on welfare sanctions are, the more the positive effects are overrated systematically. Especially the frequently occurring cases with strongly negative slopes of cumulated ATT indicate that the early positive effects, mainly driven by people with good labor market perspectives, are at the cost of people with strongly detrimental sanction effects, even in the long run.

Keywords: benefit sanctions; sanction effects; unemployment duration; welfare duration; long-term effects; unemployment benefits; unemployment policy; welfare policy; stratification (search for similar items in EconPapers)
JEL-codes: I38 J48 J64 J65 J68 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-lab
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