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Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates

  • van der Klaauw, Bas
  • van Ours, Jan C

To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once their benefit spell exceeded one year, welfare recipients were entitled to a reemployment bonus if they found a job that lasted at least six months. However, they could also be punished for noncompliance with eligibility requirements and face a sanction, i.e. a temporary reducing of their benefits. In this paper we investigate how benefit sanctions and reemployment bonuses affect job finding rates of welfare recipients. We find that benefit sanctions were effective in bringing unemployed from welfare to work more quickly while reemployment bonuses were not.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7924.

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Date of creation: Jul 2010
Handle: RePEc:cpr:ceprdp:7924
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  1. Paul T. Decker, 1994. "The Impact of Reemployment Bonuses on Insured Unemployment in the New Jersey and Illinois Reemployment Bonus Experiments," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 718-741.
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  7. Paul T. Decker & Christopher J. O'Leary, "undated". "Evaluating Pooled Evidence from the Reemployment Bonus Experiments," Mathematica Policy Research Reports 451a3004f93541d5a54c62bbd, Mathematica Policy Research.
  8. Gerard Van Den Berg & Antoine Bozio & Monica Costa Dias, 2013. "Policy discontinuity and duration outcomes," IFS Working Papers W13/27, Institute for Fiscal Studies.
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  10. Card, David & Kluve, Jochen & Weber, Andrea, 2009. "Active Labor Market Policy Evaluations: A Meta-Analysis," IZA Discussion Papers 4002, Institute for the Study of Labor (IZA).
  11. McVicar, Duncan, 2008. "Job search monitoring intensity, unemployment exit and job entry: Quasi-experimental evidence from the UK," Labour Economics, Elsevier, vol. 15(6), pages 1451-1468, December.
  12. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2002. "The Effect of Benefit Sanctions on the Duration of Unemployment," IZA Discussion Papers 469, Institute for the Study of Labor (IZA).
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  18. van den Berg, Gerard J & Vikström, Johan, 2009. "Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality," CEPR Discussion Papers 7460, C.E.P.R. Discussion Papers.
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  23. Boockmann, Bernhard & Thomsen, Stephan L. & Walter, Thomas, 2009. "Intensifying the Use of Benefit Sanctions: An Effective Tool to Shorten Welfare Receipt and Speed Up Transitions to Employment?," IZA Discussion Papers 4580, Institute for the Study of Labor (IZA).
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  27. Jensen, Peter & Rosholm, Michael & Svarer, Michael, 2003. "The response of youth unemployment to benefits, incentives, and sanctions," European Journal of Political Economy, Elsevier, vol. 19(2), pages 301-316, June.
  28. Anderson, Patricia M, 1992. "Time-Varying Effects of Recall Expectation, a Reemployment Bonus, and Job Counseling on Unemployment Durations," Journal of Labor Economics, University of Chicago Press, vol. 10(1), pages 99-115, January.
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