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Monitoring, Sanctions and Front-Loading of Job Search in a Non-Stationary Model

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Author Info

  • Cockx, Bart

    ()
    (Ghent University)

  • Dejemeppe, Muriel

    ()
    (Université catholique de Louvain)

  • Launov, Andrey

    ()
    (University of Mainz)

  • Van der Linden, Bruno

    ()
    (IRES, Université catholique de Louvain)

Abstract

We develop and estimate a non-stationary job search model to evaluate a scheme that monitors job search effort and sanctions insured unemployed whose effort is deemed insufficient. The model reveals that such schemes provide incentives to the unemployed to front-load search effort prior to monitoring. This causes the job finding rate to increase above the post sanction level. After validating the model both internally and externally, we conclude that the scheme is effective in raising the job finding rate with minor wage losses. A basic cost-benefit analysis demonstrates that welfare losses for the unemployed are compensated by net efficiency gains for public authorities and society.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6181.

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Length: 44 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6181

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Related research

Keywords: unemployment benefits; non-stationary job search; sanctions; monitoring; structural estimation;

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References

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  1. Bloemen, Hans G., 2001. "Job search, search intensity and labour market transitions : an empirical analysis," Serie Research Memoranda 0037, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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Citations

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Cited by:
  1. B. Cockx & C. Ghirelli & B. Van Der Linden, 2013. "Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/833, Ghent University, Faculty of Economics and Business Administration.
  2. Cockx, Bart & Ghirelli, Corinna & Van der Linden, Bruno, 2014. "Is it socially efficient to impose job search requirements on unemployed benefit claimants with hyperbolic preferences?," Journal of Public Economics, Elsevier, vol. 113(C), pages 80-95.
  3. van den Berg, Gerard J. & van der Klaauw, Bas, 2013. "Structural Empirical Evaluation of Job Search Monitoring," IZA Discussion Papers 7740, Institute for the Study of Labor (IZA).
  4. Cockx, Bart & Dejemeppe, Muriel, 2012. "Monitoring job search effort: An evaluation based on a regression discontinuity design," Labour Economics, Elsevier, vol. 19(5), pages 729-737.

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