Modeling Financial Incentives to Get the Unemployed Back to Work
We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. We find that benefit sanctions are more effective in reducing unemployment than an across-the-board reduction in the replacement rate, for a given loss in welfare for the unemployed. We decompose the effects of a sanction system into micro, crowding-out, spillover, and tax effects.
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Volume (Year): 162 (2006)
Issue (Month): 2 (June)
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