Working Paper: CEPR ID: DP2447
Authors: Gerard J. van den Berg; Bas van der Klaauw; Jan C. van Ours
Abstract: In The Netherlands, the average exit rate out of welfare is dramatically low. Most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency. If they do not, then a sanction in the form of a temporary benefit reduction can be imposed. This paper investigates the effect of such sanctions on the transition from welfare to work using a unique set of rich administrative data on welfare recipients in The Netherlands. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work. We also describe the other determinants of the transition from welfare to work.
Keywords: unemployment; duration; punishment; search effort; welfare agency
JEL Codes: C41; J64; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Sanctions (F51) | Lower reservation wage (J38) |
| Sanctions (F51) | Enhanced job search intensity (J68) |
| Early imposition of sanctions (Z28) | Reduced likelihood of long-term dependency on welfare (I38) |
| Increased monitoring and counseling (I19) | Positive contribution to job search behavior (J68) |
| Imposition of sanctions (F51) | Transition rate from welfare to work (I38) |
| Sanctions (F51) | Transition rate from welfare to work (I38) |