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Intensifying the Use of Benefit Sanctions: An Effective Tool to Shorten Welfare Receipt and Speed Up Transitions to Employment?

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  • Boockmann, Bernhard

    ()
    (Institut für Angewandte Wirtschaftsforschung (IAW))

  • Thomsen, Stephan L.

    ()
    (NIW Hannover, Leibniz Universität Hannover)

  • Walter, Thomas

    ()
    (ZEW Mannheim)

Abstract

Benefit sanctions imposed on non-compliant welfare recipients are a new element in the German welfare system. In practice, the sanction policy and the application of sanctions vary considerably across the 439 welfare agencies. Based on combined administrative and survey data, these differences are used as instrumental variables to estimate the effect of sanctions on the drop-out from welfare and the transition to employment. The estimated local average treatment effect (LATE) is an estimate of the effectiveness of an intensified use of sanctions. The results show that tightening sanction policy would be quite effective.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4580.

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Length: 34 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4580

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Keywords: benefit sanctions; welfare recipients; IV; LATE;

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References

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  1. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, Econometric Society, vol. 62(2), pages 467-75, March.
  2. 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, University of Chicago Press, vol. 22(1), pages 211-241, January.
  3. Lalive, Rafael & van Ours, Jan C & Zweimüller, Josef, 2002. "The Effect of Benefit Sanctions on the Duration of Unemployment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3311, C.E.P.R. Discussion Papers.
  4. 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, Royal Economic Society, vol. 115(505), pages 602-630, 07.
  5. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, Econometric Society, vol. 65(3), pages 557-586, May.
  6. Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving incentives in unemployment insurance: A review of recent research," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2003:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  7. Barbara Hofmann, 2008. "Work Incentives? Ex Post Effects of Unemployment Insurance Sanctions - Evidence from West Germany," CESifo Working Paper Series 2508, CESifo Group Munich.
  8. Svarer, Michael, 2007. "The Effect of Sanctions on the Job Finding Rate: Evidence from Denmark," IZA Discussion Papers 3015, Institute for the Study of Labor (IZA).
  9. repec:iab:iabzaf:v:40:i:1:p:45-64 is not listed on IDEAS
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Citations

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Cited by:
  1. Schneider, Hilmar & Uhlendorff, Arne & Zimmermann, Klaus F., 2010. "Mit Workfare aus der Sozialhilfe? Lehren aus einem Modellprojekt," IZA Standpunkte, Institute for the Study of Labor (IZA) 33, Institute for the Study of Labor (IZA).
  2. Alessio J. G. Brown & Johannes Koettl, 2012. "Active Labor Market Programs - Employment Gain or Fiscal Drain?," Kiel Working Papers 1785, Kiel Institute for the World Economy.
  3. Boockmann, Bernhard & Osiander, Christopher & Stops, Michael & Verbeek, Hans, 2013. "Effekte von Vermittlerhandeln und Vermittlerstrategien im SGB II und SGB III (Pilotstudie) : Abschlussbericht an das IAB durch das Institut für Angewandte Wirtschaftsforschung e. V. (IAW), Tübingen," IAB-Forschungsbericht, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201307, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  4. Bas van der Klaauw & Jan C. van Ours, 2010. "Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions affect Job Finding Rates," Tinbergen Institute Discussion Papers 10-064/3, Tinbergen Institute.
  5. Koning, Pierre, 2013. "Making Work Pay for the Indebted: The Effect of Debt Services on the Exit Rates of Unemployed Individuals," IZA Discussion Papers 7873, Institute for the Study of Labor (IZA).
  6. Vodopivec, Milan, 2009. "Introducing unemployment insurance to developing countries," Social Protection Discussion Papers 49170, The World Bank.
  7. Jan Hagemejer & Joanna Tyrowicz & Jan Svejnar, 2014. "Measuring the Causal Effect of Privatization on Firm Performance," Working Papers 2014-14, Faculty of Economic Sciences, University of Warsaw.

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