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Modeling Financial Incentives to Get Unemployed Back to Work

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Author Info
Boone, Jan (Tilburg University, CentER and CPB Netherlands Bureau for Economic Policy Analysis)
van Ours, Jan C. () (Tilburg University, CentER, Institute for Labor Studies (OSA), IZA, Bonn and CEPR)

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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 behavior of individual unemployed workers are relevant, but also macro-spillover effects from the additional creation of vacancies, which originates from the increased effectiveness of labor 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.

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File URL: ftp://repec.iza.org/RePEc/Discussionpaper/dp108.pdf
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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 108.

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Length: 52 pages
Date of creation: Jan 2000
Date of revision:
Handle: RePEc:iza:izadps:dp108

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Related research
Keywords: Unemployment benefits; financial incentives; sanctions;

Other versions of this item:

Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy

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This page was last updated on 2009-11-30.

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