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Modelling Financial Incentives To Get Unemployed Back To Work


  • Boone, Jan
  • van Ours, Jan C


We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. In our analysis we find that not only micro-effects concerning the behaviour of individual unemployed workers are relevant, but also macro-spillover effects from the additional creation of vacancies, which originates from the increased effectiveness of labour supply. We advocate that for a given loss in welfare for the unemployed benefit sanctions are more effective in reducing unemployment than an across the board reduction in the replacement rate.

Suggested Citation

  • Boone, Jan & van Ours, Jan C, 2000. "Modelling Financial Incentives To Get Unemployed Back To Work," CEPR Discussion Papers 2361, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2361

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    More about this item


    Financial Incentives; Sanctions; Unemployment Benefits;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy


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