Effects of Unemployment Benefit Sanctions Among Young Adults With and Without Labour Market Disadvantages: A Register-Based Target Trial Emulation in Finland

Background To encourage transitions into employment or education, governments impose benefit sanctions on unemployed individuals who fail to comply with programme requirements. However, evidence on the effectiveness of such sanctions remains limited, particularly among young adults. We investigated whether sanctions are associated with transitions into employment or education and whether effects differ among individuals facing labour market disadvantages. To estimate causal effects using observational data, we applied a target trial emulation framework. Methods We used nationwide Finnish register data on 51,312 unemployed individuals under the age of 25 in 2022. Following a target trial emulation framework, we treated sanctions as the intervention and applied coarsened exact matching with importance weights to approximate random allocation. We constructed a labour market disadvantage score by summing five indicators associated with poorer labour market attachment. Time-to-event outcomes over a 24-month follow-up were estimated using Kaplan–Meier methods and parametric survival models. Results Overall, 78% of young adults transitioned to employment or education within an average of 10 months. With all sanctions, the median time to employment or education was slightly shorter for individuals who were sanctioned, with hazard ratios over 24 months. Among individuals without labour market disadvantages, sanctions were associated with a 2.7-month reduction in time to transition into employment or education. Among those with 3 to 5 labour market risks, the reduction was 0.1 months. Survival analyses supported the divergent associations among individuals with and without labour market disadvantages. Conclusions Unemployment benefit sanctions can facilitate transitions to employment or education among unemployed young adults without labour market disadvantages. However, the effects of sanctions differ between those with and without such disadvantages. Policymakers may use these findings to retarget sanctions or combine them with supportive measures.