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

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Author Info

  • Müller, Kai-Uwe

    ()
    (DIW Berlin)

  • Steiner, Viktor

    ()
    (Free University of Berlin)

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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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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3483.

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    Length: 32 pages
    Date of creation: May 2008
    Date of revision:
    Handle: RePEc:iza:izadps:dp3483

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    Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
    Phone: +49 228 3894 223
    Fax: +49 228 3894 180
    Web page: http://www.iza.org

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    Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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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, Wiley Blackwell, vol. 22(1), pages 31-72, 02.
    2. Lechner, Michael, 1996. "An Evaluation of Public Sector Sponsored Continuous Vocational Training Programs in East Germany," Discussion Papers, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre 539, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    3. Boone, Jan & Fredriksson, Peter & Holmlund, Bertil & van Ours, Jan C., 2001. "Optimal Unemployment Insurance with Monitoring and Sanctions," IZA Discussion Papers 401, Institute for the Study of Labor (IZA).
    4. Abbring, Jaap H. & Berg, Gerard J. van den & Ours, Jan C. van, 1996. "The effect of unemployment insurance sanctions on the transition rate from unemployment to employment," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0038, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    5. 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.
    6. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 1998. "Punitive Sanctions and the Transition Rate from Welfare to Work," Tinbergen Institute Discussion Papers 98-076/3, Tinbergen Institute.
    7. Kai-Uwe Müller, 2007. "Individual and regional determinants of receiving unemployment benefit sanctions in Germany," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, Springer, vol. 1(3), pages 275-286, December.
    8. 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].
    9. Sophia Rabe-Hesketh & Anders Skrondal & Andrew Pickles, 2004. "GLLAMM Manual," U.C. Berkeley Division of Biostatistics Working Paper Series, Berkeley Electronic Press 1160, Berkeley Electronic Press.
    10. 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, Ifo Institute for Economic Research at the University of Munich, vol. 3(2), pages 26-29, 07.
    11. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, Econometric Society, vol. 71(5), pages 1491-1517, 09.
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    Cited by:
    1. 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, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 232(1), pages 31-60, January.

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