Job Search Monitoring and Standard of Proof: The Role of Job Advisors’ Preferences

This paper examines how job advisors' preferences shape the effectiveness of unemployment monitoring and sanction schemes. We develop a three-agent model — comprising the policymaker, the job advisor, and the job seeker — characterized by informational asymmetries: neither job-search effort nor the job advisor's behavior is perfectly observable. Job advisors are assumed to be averse to errors in judgment, in the sense that their utility is negatively affected when they unfairly sanction a compliant job seeker. We show that, when the policymaker increases the severity of sanctions, job advisors optimally raise the standard of proof required to impose a sanction in order to mitigate the risk of wrongful punishment. As a result, strengthening sanction severity has an ambiguous effect on unemployed workers' incentives and may, in some cases, undermine the overall effectiveness of monitoring. To address this inefficiency, we propose two corrective mechanisms: (i) the introduction of a warning system designed to limit the risk of unjustified sanctions, and (ii) granting job advisors the discretion to adjust sanction severity as a function of the job-search evidence observed.