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Modelling Financial Incentives To Get Unemployed Back To Work

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  • van Ours, Jan C.
  • Boone, Jan

Abstract

We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. In our analysis we find that not only micro-effects concerning the behaviour of individual unemployed workers are relevant, but also macro-spillover effects from the additional creation of vacancies, which originates from the increased effectiveness of labour supply. We advocate that for a given loss in welfare for the unemployed benefit sanctions are more effective in reducing unemployment than an across the board reduction in the replacement rate.

Suggested Citation

  • van Ours, Jan C. & Boone, Jan, 2000. "Modelling Financial Incentives To Get Unemployed Back To Work," CEPR Discussion Papers 2361, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2361
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    Keywords

    Financial incentives; Sanctions; Unemployment benefits;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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