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

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Author Info

  • Bart Cockx

    (Sherppa, Ghent U., IZA and CESIfo)

  • Muriel Dejemeppe

    (IRES, Universit´e catholique de Louvain)

  • Andrey Launov

    ()
    (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)

  • Bruno Van der Linden

    (IRES, Universit´e catholique de Louvain, FNRS and IZA)

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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File URL: http://www.macro.economics.uni-mainz.de/RePEc/pdf/Discussion_Paper_1114.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz in its series Working Papers with number 1114.

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Length: 42 pages
Date of creation: 21 Nov 2011
Date of revision: 21 Nov 2011
Handle: RePEc:jgu:wpaper:1114

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Related research

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

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References

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Citations

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Cited by:
  1. Bart COCKX & Corinna GHIRELLI & Bruno VAN DER LINDEN, 2013. "Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. 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).
  3. 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.
  4. 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.

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