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

  • 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)

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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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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  1. Boone, Jan & Sadrieh, Abdolkarim & van Ours, Jan C., 2004. "Experiments on Unemployment Benefit Sanctions and Job Search Behavior," IZA Discussion Papers 1000, Institute for the Study of Labor (IZA).
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  3. Andrey Launov & Klaus Wälde, 2010. "Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits," Working Papers 1007, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 21 May 2010.
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  14. Boone, Jan & Fredriksson, Peter & Holmlund, Bertil & van Ours, Jan, 2001. "Optimal Unemployment Insurance with Monitoring and Sanctions," Working Paper Series 2001:20, Uppsala University, Department of Economics.
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  24. Fougère, Denis & Pradel, Jacqueline & Roger, Muriel, 2009. "Does the public employment service affect search effort and outcomes?," European Economic Review, Elsevier, vol. 53(7), pages 846-869, October.
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  27. Ofer Setty, 2013. "Optimal Unemployment Insurance with Monitoring," 2013 Meeting Papers 26, Society for Economic Dynamics.
  28. Dolton, Peter & O'Neill, Donal, 1996. "Unemployment Duration and the Restart Effect: Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 106(435), pages 387-400, March.
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