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The Effect of Sanctions on the Job Finding Rate: Evidence from Denmark

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Author Info
Michael Svarer () (University of Aarhus, CAM and IZA)

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Abstract

This paper investigates the effect of sanctions of unemployment insurance benefits on the exit rate from unemployment for a sample of Danish unemployed. According to the findings are that even moderate sanctions have rather large effects. For both males and females the exit rate increases by more than 50% following imposition of a sanction. The paper exploits a rather large sample to elaborate on the basic findings. It is shown that harder sanctions have a larger effect, that the effect of sanctions wear out after around 3 months and that particular groups of unemployed are more responsive to sanctions than others. Finally, the analysis suggests that men react ex ante to the risk of being sanctioned in the sense that men who face higher sanction risk leave unemployment faster.

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File URL: ftp://repec.iza.org/RePEc/Discussionpaper/dp3015.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 3015.

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Length: 39 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3015

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Related research
Keywords: sanctions; unemployment hazard;

Other versions of this item:

Find related papers by JEL classification:
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael Rosholm & Michael Svarer, 2004. "Estimating the Threat Effect of Active Labour Market Programmes," Economics Working Papers 2004-6, School of Economics and Management, University of Aarhus. [Downloadable!]
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  2. Boone, J. & Ours, J.C. van, 2000. "Modeling financial incentives to get unemployed back to work," Discussion Paper 2, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  3. Gerard J. van den Berg & Bas van der Klaauw, 2006. "Counseling And Monitoring Of Unemployed Workers: Theory And Evidence From A Controlled Social Experiment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 895-936, 08. [Downloadable!] (restricted)
    Other versions:
  4. Abbring, Jaap H & van den Berg, Gerard J, 2003. "A simple procedure for the evaluation of treatment effects on duration variables," Working Paper Series 2003:19, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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  5. 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. [Downloadable!]
  6. Boone, J. & Sadrieh, A. & van Ours, J. C., 2004. "Experiments on unemployment benefit sanctions and job search behavior," Discussion Paper 8, Tilburg University, Center for Economic Research. [Downloadable!]
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  7. Torben Andersen & Michael Svarer, 2007. "Flexicurity – Labour Market Performance in Denmark," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  8. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany. [Downloadable!]
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  9. Jensen, Peter & Rosholm, Michael & Svarer, Michael, 2003. "The response of youth unemployment to benefits, incentives, and sanctions," European Journal of Political Economy, Elsevier, vol. 19(2), pages 301-316, June. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
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  11. Bart Cockx & Muriel Dejemeppe, 2007. "Is the Notification of Monitoring a Threat to the Unemployed? A Regression Discontinuity Approach," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  12. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-210, January. [Downloadable!]
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  13. Fredriksson, Peter & Holmlund, Bertil, 2005. "Optimal unemployment insurance design: time limits, monitoring, or workfare?," Working Paper Series 2005:13, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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  14. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, 2005. "The Effect Of Benefit Sanctions On The Duration Of Unemployment," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1386-1417, December. [Downloadable!] (restricted)
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  15. Jan Boone & Jan C. van Ours, 2006. "Modeling Financial Incentives to Get the Unemployed Back to Work," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(2), pages 227-252, June. [Downloadable!] (restricted)
  16. Røed, Knut & Westlie, Lars, 2007. "Unemployment Insurance in Welfare States: Soft Constraints and Mild Sanctions," Memorandum 13/2007, Oslo University, Department of Economics. [Downloadable!]
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  17. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2003. "Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System," American Economic Review, American Economic Association, vol. 93(4), pages 1313-1327, September. [Downloadable!]
  18. Jan Boone & Peter Fredriksson & Bertil Holmlund & Jan C. van Ours, 2007. "Optimal Unemployment Insurance with Monitoring and Sanctions," Economic Journal, Royal Economic Society, vol. 117(518), pages 399-421, 03. [Downloadable!] (restricted)
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  19. Lars Pico Geerdsen, 2006. "Is there a Threat Effect of Labour Market Programmes? A Study of ALMP in the Danish UI System," Economic Journal, Royal Economic Society, vol. 116(513), pages 738-750, 07. [Downloadable!] (restricted)
  20. 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. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Behncke, Stefanie & Frölich, Markus & Lechner, Michael, 2008. "A Caseworker Like Me: Does the Similarity between Unemployed and Caseworker Increase Job Placements?," IZA Discussion Papers 3437, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Michael Svarer, 2008. "Crime and Partnerships," Economics Working Papers 2008-06, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  3. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity – labour market performance in Denmark," Economics Working Papers 2007-09, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  4. Ott Toomet, 2008. "Threat Effect Of The Labour Market Programs In Denmark: Evidence From A Quasi-Experiment," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 62, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
  5. Stefanie Behncke & Markus Fröhlich & Michael Lechner, 2007. "Unemployed and their Caseworkers: Should they be Friends or Foes?," University of St. Gallen Department of Economics working paper series 2007 2007-45, Department of Economics, University of St. Gallen. [Downloadable!]
    Other versions:
  6. Barbara Hofmann, 2008. "Work Incentives? Ex Post Effects of Unemployment Insurance Sanctions - Evidence from West Germany," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Tomi Kyyrä & Pierpaolo Parrotta & Michael Rosholm, 2009. "The effect of receiving supplementary UI benefits on unemployment duration," Working Papers 1, Government Institute for Economic Research Finland (VATT). [Downloadable!]
    Other versions:
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