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Cash-in-Hand, Benefit Fraud and Unemployment Insurance

Author

Listed:
  • Long, Iain W.

    (Cardiff Business School)

  • Polito, Vito

    (Cardiff Business School)

Abstract

Recent evidence questions the nature of the re-employment spike as unemployment insurance (UI) payments expire. Unemployed agents do not appear to devote more time to search and are observed leaving the UI scheme early without necessarily entering employment. We show that benefit fraud is consistent with both observations. Over time, UI recipients become increasingly willing to accept short-term cash-in-hand work. This takes them away from job search. Immediately before UI expiry, the risk of punishment for fraud exceeds the value of remaining payments. Recipients may voluntarily leave the scheme to accept cash-in-hand opportunities.

Suggested Citation

  • Long, Iain W. & Polito, Vito, 2015. "Cash-in-Hand, Benefit Fraud and Unemployment Insurance," Cardiff Economics Working Papers E2015/4, Cardiff University, Cardiff Business School, Economics Section.
    • Handle: RePEc:cdf:wpaper:2015/4
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    References listed on IDEAS

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    More about this item

    Keywords

    Cash-in-hand; Benefit fraud; Unemployment insurance; Re-employment spike;
    All these keywords.

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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