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Imposed Benefit Sanctions and the Unemployment-to-Employment Transition: The German Experience

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  • Kai-Uwe Müller
  • Viktor Steiner
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    Abstract

    We analyze the effect of imposed benefit sanctions on the unemployment-to-employment transition of unemployed people entitled to unemployment compensation on the basis of register data from the German Federal Employment Agency. We combine propensity score matching with a discrete-time hazard rate model which accounts for the dynamic nature of the treatment. We find positive short- and long-term effects of benefit sanctions which are robust for men and women in East and West Germany. The effects diminish with the elapsed unemployment duration until a sanction is imposed. The limited use of benefit sanctions can thus be an effective activation tool if they take place not too late in an individual's unemployment spell.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.83472.de/dp792.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 792.

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    Length: 29 p.
    Date of creation: 2008
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp792

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    Related research

    Keywords: benefit sanctions; unemployment transitions; German labor market reform; ex-post evaluation; propensity score matching; hazard rate model; unobserved heterogeneity;

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    References

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    1. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, 02.
    2. Jaap H. Abbring & Gerard J. Berg & Jan C. Ours, 2005. "The Effect of Unemployment Insurance Sanctions on the Transition Rate from Unemployment to Employment," Economic Journal, Royal Economic Society, vol. 115(505), pages 602-630, 07.
    3. Lechner, Michael, 1999. "An Evaluation of Public-Sector-Sponsored Continuous Vocational Training Programs in East Germany," IZA Discussion Papers 93, Institute for the Study of Labor (IZA).
    4. Berg, Gerard J. van den & Klaauw, Bas van der & Ours, Jan C. van, 1998. "Punitive sanctions and the transition rate from welfare to work," Serie Research Memoranda 0033, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    5. Boone, J. & Fredriksson, P. & Holmlund, B. & Ours, J.C. van, 2001. "Optimal Unemployment Insurance with Monitoring and Sanctions," Discussion Paper 2001-85, Tilburg University, Center for Economic Research.
    6. Kai-Uwe Müller, 2007. "Individual and regional determinants of receiving unemployment benefit sanctions in Germany," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 1(3), pages 275-286, December.
    7. Sophia Rabe-Hesketh & Anders Skrondal & Andrew Pickles, 2004. "GLLAMM Manual," U.C. Berkeley Division of Biostatistics Working Paper Series 1160, Berkeley Electronic Press.
    8. Gerard J. van den Berg & Bas van der Klaauw, 2005. "Job Search Monitoring and Sanctions," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 3(2), pages 26-29, 07.
    9. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    10. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09.
    11. Schneider, Julia, 2008. "The effect of unemployment benefit II sanctions on reservation wages," IAB Discussion Paper 200819, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    Cited by:
    1. John P. Haisken-DeNew & Matthias Vorell, 2009. "Killing them with Kindness: Negative Distributional Externalities of Increasing UI Benefits," Ruhr Economic Papers 0121, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. John P. Haisken-DeNew & Christoph M. Schmidt, 2009. "Nickel and Dimed German Style: The Working Poor in Germany," Ruhr Economic Papers 0122, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Barbara Hofmann, 2012. "Short- and Long-term Ex-Post Effects of Unemployment Insurance Sanctions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 232(1), pages 31-60, January.

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