Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality

Authors


  • We are grateful for helpful suggestions from John Ham, Bertil Holmlund, Per Johansson, Katarina Richardson, four anonymous referees, and participants in seminars at IFAU, University of Southern California, IAB Nürnberg, University of Mannheim, University of Munich, and in conferences at Barcelona, Uppsala, Gent, and Essen.

Abstract

Unemployment insurance systems include the monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the causal effect of sanctions on the ensuing job quality, notably on wages and occupational level. We use Swedish data and estimate duration models dealing with selection on unobservables. We also develop a theoretical job search model that monitors job offer rejection versus job search effort. The empirical results show that, after a sanction, the wage rate is lower and individuals move more often to a part-time job and a lower occupational level, incurring human capital losses.

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