How effective are unemployment benefit sanctions? Looking beyond unemployment exit
|Title||How effective are unemployment benefit sanctions? Looking beyond unemployment exit|
|Publication Type||Journal Article|
|Year of Publication||2013|
|Authors||Arni, P, Lalive, R, van Ours, JC|
|Journal||Journal of Applied Econometrics|
|Keywords||benefit sanctions, competing-risk duration models, earnings effects, unemployment duration|
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.