HOW EFFECTIVE ARE UNEMPLOYMENT BENEFIT SANCTIONS? LOOKING BEYOND UNEMPLOYMENT EXIT
Article first published online: 19 JUN 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Volume 28, Issue 7, pages 1153–1178, November/December 2013
How to Cite
Arni, P., Lalive, R. and Van Ours, J. C. (2013), HOW EFFECTIVE ARE UNEMPLOYMENT BENEFIT SANCTIONS? LOOKING BEYOND UNEMPLOYMENT EXIT. J. Appl. Econ., 28: 1153–1178. doi: 10.1002/jae.2289
- Issue published online: 25 NOV 2013
- Article first published online: 19 JUN 2012
- Manuscript Revised: 8 MAR 2012
- Manuscript Received: 27 MAY 2010
- Swiss National Science Foundation. Grant Numbers: 100012–130114, 100012–130114, PBLAP1-127652/1
This paper provides a comprehensive evaluation of the effects of benefit sanctions on post-unemployment outcomes such as post-unemployment employment stability and earnings. We use rich register data which allow us to distinguish between a warning that a benefit reduction may take place in the near future and the actual withdrawal of unemployment benefits. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that 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. Copyright © 2012 John Wiley & Sons, Ltd.