Working Paper: CEPR ID: DP2361
Authors: Jan Boone; Jan C. van Ours
Abstract: We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. In our analysis we find that not only micro-effects concerning the behaviour of individual unemployed workers are relevant, but also macro-spillover effects from the additional creation of vacancies, which originates from the increased effectiveness of labour supply. We advocate that for a given loss in welfare for the unemployed benefit sanctions are more effective in reducing unemployment than an across the board reduction in the replacement rate.
Keywords: unemployment benefits; financial incentives; sanctions
JEL Codes: H55; J65; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment benefit sanctions (J65) | Search intensity of unemployed workers (J64) |
| Search intensity of unemployed workers (J64) | Unemployment rates (J64) |
| Unemployment benefit sanctions (J65) | Unemployment rates (J64) |
| Sanctions imposed (F51) | Search intensity of unemployed workers (J64) |
| Search intensity of unemployed workers (J64) | Job vacancies (J63) |
| Job vacancies (J63) | Unemployment rates (J64) |
| Higher sanction parameter (Z28) | Ex ante effects of sanctions (F51) |
| Ex ante effects of sanctions (F51) | Unemployment rates (J64) |