Article

How Effective Are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit

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Abstract

[Also available as: CEPR DP 7541, IFAU WP 09:22, CentER DP 09:80] This paper provides a comprehensive evaluation of benefit sanctions, i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect.

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... For example, Lalive et al (2005) found that in Switzerland, the threat of sanction increased the probability of the exit from unemployment by 25.2 percent, whereas the imposition of the sanction by additional 19.8 percent. In another study on Switzerland, Arni et al (2013) reported a threat effect of a 15.9 percent increase in the probability of the exit rate to employment and an additional 16 percent increase in this probability due to the imposition of the sanction. Similar findings are also available for other European countries (see, for example, Abbring et al, 2005;van den Berg et al, 2004; and van der Klaauw and van Ours, 2013 for the Netherlands, Hofmann, 2012;Boockmann et al, 2014, and Hillmann and Hohenleitner, 2015for Germany, Svarer, 2011 for Denmark, and van den Berg and Vikström, 2014 for Sweden). ...
... But sanctions also have strong unintended side effects: they increase the probability of the exit to inactivity. Arni et al (2013) showed that a warning increased the probability of the exit to inactivity by 99 percent, and that the imposition of the sanction added additional 67 percent. Hillmann and Hohenleitner (2015) also reported that the imposition of the sanction increased the exit rate to non-employment by 60-79 percent. ...
... Sanctions also reduce post-unemployment wages, and they lower the quality of post-unemployment. Arni et al (2013) found that earnings of jobseekers who leave the system after a warning are lower by 8 percent in the first month and by 10.7 percent after 24 months, with the imposition of the sanction reducing them by additional 7.9 percent) Similarly, in the Swedish context, van den Berg and Vikström (2014) reported that sanctions cause individuals to accept jobs with, on average, 4 percent lower hourly wage in comparison to non-sanctioned, with the effect persisting in the long run. Authors also report that sanctioned recipients have a higher frequency of part-time jobs resulting in, on average, two hours less per week than nonsanctioned. ...
Article
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Activation of the unemployed has been an important topic among policymakers during the last decades. This paper reviews the current measures in Slovenia in the area of activation of unemployment benefit recipients and it compares its formal requirements related to activation against the international background. The paper focuses on five activation areas: adjustment of unemployment benefit eligibility, improving employment services, participation in active labour market policies, monitoring and sanctions. The review lists several recommendations Slovenia should apply to activate unemployment benefit recipients, including introducing more demanding job search requirements and increased monitoring of the compliance with these requirements, introducing compulsory participation in active labour market programs, checking the consistency and effectiveness of the current profiling system, and strengthening the ex-ante effect of sanctions.
... For example, the introduction of sanctions in the US -as part of Clinton's welfare reforms -did not have strong effects on employment (Wu, Cancian and Wallace 2014). Moreover, sanctions also seem to produce lower wages, more unemployment days post-sanction, and shorter periods in work (Arni, Lalive and Van Ours 2013, Fording, Schram and Soss 2013, Hofmann 2012. Importantly, arguments in favour of sanctions assume that suitable work is available for jobseekers in their area, but this is not always the case. ...
... Existing evidence exploring this period indicates rising sanction rates within local authorities increased the off-flow rate (the number of people leaving JSA) without increasing employment rates (Loopstra et al. 2015b). Moreover, their results indicate that the vast majority of people leaving JSA end up in unknown destinations, suggesting that sanctions may have had a minimal impact of labour market outcomes but may -as seen in other contexts -have increased welfare exit (Arni, Lalive and Van Ours 2013). ...
... Sanctions are increasingly used to encourage labour market activity among both those who are directly sanctioned and those who may be sanctioned if they do not comply with the conditions associated with receipt of social security (Venn 2012). There is also some evidence that sanctions increase the rates of re-employment (Abbring, van den Berg and van Ours 2005, Boockmann, Thomsen and Walter 2014), even if they also appear to be associated with lower wages upon re-entry, shorter spells in work, and greater welfare exit (Arni, Lalive and Van Ours 2013, Fording, Schram and Soss 2013, Hofmann 2012. However, few studies have considered how sanctions affect the labour market outcomes of specific groups exposed to sanctions and conditionality (Markussen, Roed and Schreiner 2015). ...
Preprint
Full-text available
Imposing financial penalties on claimants of unemployment insurance may incentivise labour market re-entry. However, sanctions may have differential effects depending on the work-readiness of the claimants. Here, I explore whether sanctioning disabled claimants is associated with greater labour market activity or inactivity among disabled people using data on 346 British local authorities between 2009 and 2014. When the number of sanctioned disabled claimants rises (as a proportion of all claimants) the proportion of economically inactive people who are also disabled becomes larger. There is not a clear relationship between sanctioning disabled claimants the proportion of employed people who are disabled.
... Economic theory posits that such measures will increase search intensity and reduce the reservation wage (the wage below which a person prefers to remain unemployed), thereby increasing the exit rate from unemployment benefits and the job entry rate [1]. Unlike with training programs, there is no reason to expect lock-in effects-effects that reduce job search while people are participating in the program-from monitoring and sanctions [2]. On the other hand, tougher monitoring or stricter sanctions may lead job seekers to substitute formal (monitored) job search for informal (unmonitored, such as word-of-mouth) job search, which could have ambiguous effects on unemployment duration and job entry rates, depending on which type of search is more effective [2]. ...
... Unlike with training programs, there is no reason to expect lock-in effects-effects that reduce job search while people are participating in the program-from monitoring and sanctions [2]. On the other hand, tougher monitoring or stricter sanctions may lead job seekers to substitute formal (monitored) job search for informal (unmonitored, such as word-of-mouth) job search, which could have ambiguous effects on unemployment duration and job entry rates, depending on which type of search is more effective [2]. Further, the reduction in the reservation wage may lead to lower quality job matches. ...
... The magnitude of these measured effects varies, but two upper-end estimates suggest that receiving a sanction more than doubles the unemployment benefit exit rate and the job entry rate [8], [9]. In Switzerland, unemployment benefit recipients receive sanction warning letters in advance of the imposition of a sanction, so the two studies using Swiss data are able to separately identify the effect of receiving a warning letter from that of receiving a sanction [2], [10]. The studies find similar effects in both cases on the unemployment benefit exit rate and the job entry rate. ...
... In addition, Arni et al. (2013) recognise that benefit sanctions may be associated with negative impacts on labour force attachment for some individuals. To explain this potential outcome within the job search framework, they posit -in an arguably ad hoc fashion -that a certain subpopulation of unemployed individuals gain only slightly more utility from being in registered unemployment than being in unregistered unemployment. ...
... The key limitation of this study, however, is that it does not distinguish between the types of exit from UI benefits, focusing solely on unemployment duration. A study by Arni et al. (2013), in contrast, is able to overcome this limitation, considering threat and imposition effects on employment re-entry, employment stability and earnings for a period of two years following unemployment exit. Using administrative data from Switzerland, the results suggest that threat and imposition effects are associated with increases in the rate of job re-entry in the short-term. ...
... As also discussed in Chapter 4, for example, the literature on the social determinants of health does not suggest that all employment is conducive to good mental health, but rather that it is the quality of employment that is important. Indeed, the available evidence suggests that sanctions are associated with negative impacts on job quality, in terms of wages, stability and hours (Arni et al., 2013;van den Berg and Vikström, 2014), which might be expected to incur adverse mental health impacts (Allen et al., 2014;WHO, 2014;Silva et al., 2016). The increased short-term employment effect of sanctions for some claimants, furthermore, has also been observed to be smaller than increases in economic inactivity for other claimants (Arni et al., 2013;Busk, 2016). ...
Thesis
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Increasingly, social security systems in the UK and internationally stipulate work-related behavioural requirements for claimants of out-of-work benefits. These are accompanied by claimant monitoring as well as the threat and imposition of financial penalties, which are known as benefit sanctions. The growth in recent decades in the use of behavioural conditions and sanctions has generated significant debate and contestation, in terms of the ethical justification of such approaches and, relatedly, evidence regarding their overall effectiveness. An important topic concerns the impacts of benefit sanctions on claimants. Policymakers typically assume that sanctions will improve labour market outcomes for the unemployed, which will then lead to a range of individual and societal benefits. A well-developed literature exists in relation to the labour market impacts of sanctions, though less is known in terms of their wider effects. A small but growing body of research, nevertheless, links benefit sanctions with outcomes such as financial hardship and foodbank usage, and there is increasing concern regarding adverse impacts on mental health. This thesis investigates the relationship between benefit sanctions and mental health outcomes, and considers whether higher rates and/or longer durations of sanctions are associated with adverse mental health impacts. A quantitative study is undertaken that focuses on Jobseekers Allowance (JSA) sanctions during the period of Coalition government (2010-15). In this period, the frequency of sanctions varied significantly and their severity was increased following the Welfare Reform Act 2012. This exogenous variation is used to better estimate the independent effect of sanctions on mental health outcomes. Given data availability, the empirical investigation carries out four analyses involving different data sources, outcomes and research designs at separate data levels. The first two studies carry out longitudinal ecological analyses using local authority-level data and fixed effects models. They find that, following the Welfare Reform Act 2012: every 10 additional sanctions applied per 100,000 population per quarter are associated with 4.57 additional antidepressant prescribing items; and that every 10 additional sanctions applied per 100,000 working age population per quarter are associated with 8.09 additional people suffering from anxiety and/or depression. The third study carries out a multi-level analysis, which provides a robustness check on the aggregate-level analysis carried out in the second study. It finds that, in the post-reform period, increases in the area-level sanctions rate are associated with increases in the likelihood that JSA claimants suffer from anxiety and/or depression. Finally, the fourth study carries out a difference-in-differences analysis. It indicates that the harsher sanctioning environment brought about at the onset of the Coalition government is associated with an increase in JSA claimants newly experiencing anxiety and/or depression. These results combine to provide a robust indication that JSA sanctions are associated with adverse mental health impacts, which is an important contribution to the existing empirical literature. They suggest that UK sanctions policy is overly harsh, and that steps need to be taken to reduce the adverse effects that it entails for claimants.
... A growing body of empirical evidence has found that the use of financial sanctions in unemployment payment systems can lead to fewer people receiving unemployment benefits (e.g., Abbring et al., 2005;Svarer, 2011;Arni et al., 2013;Boockmann et al., 2014;Van der Klaauw & Van Ours, 2013). In addition to the financial cost to recipients, however, sanctions may also impose unintended costs on other public agencies, charities and voluntary organisations through food insecurity, increased homelessness, more crime, etc. (Garthwaite, 2016). ...
... Along analogous lines, Arni et al. (2013) found that warnings of an impending sanction increased Swiss jobseekers' rate of exit into employment by 17.1 per cent and imposing the sanction increased the rate by a further 16.1 per cent. Similarly, Lalive et al. (2005) found that the exit rate increases by 25 per cent following a warning, and again by 20 per cent once a sanction is actually imposed. ...
... Sanction application can also be associated with several negative effects. For example, Arni et al. (2013) found that the combined effect of warning jobseekers about sanctions and then enforcing the sanction increased exit to nonemployment by 116 per cent. Negative effects also appear to increase with severity of sanctions. ...
Article
Existing evidence has demonstrated that sanctions affect unemployment payment recipients’ behaviour. However, in addition to financial impacts, sanction application includes administrative processes. This study examines a feature of Australian unemployment benefits, whereby jobseekers not meeting requirements may face a zero‐dollar sanction (termed suspension). The results indicate a strong behavioural response, with previously suspended jobseekers 13.1 percentage points more likely to attend their next appointment. Further, ongoing behavioural change was observed, even for jobseekers with a history of previous non‐compliance. This suggests temporary payment suspension and associated administrative processes are effective at securing behavioural change, without the need for lasting financial impact.
... This implies that not only the absolute number, but also the share of stable job matches is higher among the most productive caseworkers. This is remarkable, as treatments commonly used in UI -in particular job search monitoring and sanctions-have been shown to lower post-unemployment job stability (e.g., Petrongolo, 2009;Arni, Lalive and Van Ours, 2013). Finally, column 5 ...
... Both structural and reduced form analyses commonly assume search effort to be the main source of variation in the duration of unemployment spells, without actually observing effort provision. Recent exceptions include reduced form studies by Marinescu (2017), Fradkin (2017) and Lichter (2017), who estimate the effects of UI benefit generosity on effort provision using online search data and survey data, 6 A number of studies show how the introduction or strengthening of a job search monitoring regime changes job finding outcomes (Arni, Lalive and Van Ours, 2013; Van den Berg and McVicar, 2008;Petrongolo, 2009;Manning, 2009;Bloemen, Hochguertel and Lammers, 2013). Another set of studies exploits variation in job search monitoring resulting from field experiments in different U.S. states (Johnson and Klepinger, 1994;Meyer, 1995;Klepinger, Johnson and Joesch, 2002;Ashenfelter, Ashmore and Deschenes, 2005). ...
... sickness or an accident) for not having submitted the protocol. This is why the probability does not increase to 1. 10 This procedure is also described in Lalive, van Ours and Zweimueller (2005) and Arni, Lalive and Van Ours (2013), who estimate the effects of non-compliance notifications and sanctions using a timing-of-events framework. ...
Thesis
Modern welfare states aim at designing unemployment insurance (UI) schemes which minimize the length of unemployment spells. A variety of institutions and incentives, which are embedded in UI schemes across OECD countries, reflect this attempt. For instance, job seekers entering UI are often provided with personal support through a caseworker. They also face the requirement to regularly submit a minimum number of job applications, which is typically enforced through benefit cuts in the case of non-compliance. Moreover, job seekers may systematically receive information on their re-employment prospects. As a consequence, UI design has become a complex task. Policy makers need to define not only the amount and duration of benefit payments, but also several other choice parameters. These include the intensity and quality of personal support through caseworkers, the level of job search requirements, the strictness of enforcement, and the information provided to unemployed individuals. Causal estimates on how these parameters affect re-employment outcomes are thus central inputs to the design of modern UI systems: how much do individual caseworkers influence the transition out of unemployment? Does the requirement of an additional job application translate into increased job finding? Do individuals behave differently when facing a strict versus mild enforcement system? And how does information on re-employment prospects influence the job search decision? This dissertation proposes four novel research designs to answer this question. Chapters one to three elaborate quasi-experimental identification strategies, which are applied to large-scale administrative data from Switzerland. They, respectively, measure how personal interactions with caseworkers (chapter one), the level of job search requirements (chapter two) and the strictness of enforcement (chapter three) affect re-employment outcomes. Chapter four proposes a structural estimation approach, based on linked survey and administrative data from Germany. It studies how over-optimism on future wage offers affects the decision to search for work, and how the provision of information changes this decision.
... Two other papers studying threat effects of sanctions are Lalive et al. (2005) and Arni et al. (2013), which exploit within-regional differences in the rate at which warnings are issued. They show a positive correlation between the cross-PES offices variation in the job finding rate and the variation in the propensity of issuing warnings. ...
... To estimate the effect of a sanction I use a bivariate duration model commonly referred to as the Timing-of-Events (ToE) model (Abbring and van den Berg, 2003). This model is the standard approach for the estimation of sanction effects (see e.g., Arni et al., 2013;van den Berg and Vikström, 2014). ...
... Similar results have been found in many other settings, such as Switzerland(Lalive et al., 2005), Denmark(Svarer, 2011), Germany(Hofmann, 2008;van den Berg et al. 2013;Müller and Steiner, 2008), and Norway(Røed and Westlie, 2012). 8 See e.g.,Arni et al. (2013) and van denBerg and Vikström (2014). Other studies have also found differential effects of sanctions and financial bonuses (van der Klaauw and van Ours, 2013), and for different types of unemployment benefits(Busk, 2016). ...
Preprint
Full-text available
This paper studies threat effects of unemployment insurance (UI) benefit sanctions on job exit rates. Using a difference-in-differences design, I exploit two reforms of the Swedish UI system that made monitoring and sanctions considerably stricter at different points in time for different jobseeker groups. The results show that men and long-term unemployed individuals respond to the tighter monitoring and the threat of sanctions by finding jobs faster, whereas women do not. I also estimate the effect of receiving a sanction on the job exit rates and find significant sanction imposition effects. However, a decomposition exercise shows that these sanction imposition effects explain very little of the overall reform effects, so that most of the reform effects arise through threat effects. A direct policy implication is that the total impact of monitoring and sanctions may be severely underestimated when focusing solely on the effects on those actually receiving sanctions.
... For example, the introduction of sanctions in the US -as part of Clinton's welfare reforms -did not have strong effects on employment (Wu, Cancian and Wallace 2014). Moreover, sanctions also seem to produce lower wages, more unemployment days post-sanction, and shorter periods in work (Arni, Lalive and Van Ours 2013, Fording, Schram and Soss 2013, Hofmann 2012. Importantly, arguments in favour of sanctions assume that suitable work is available for jobseekers in their area, but this is not always the case. ...
... Existing evidence exploring this period indicates rising sanction rates within local authorities increased the off-flow rate (the number of people leaving JSA) without increasing employment rates (Loopstra et al. 2015b). Moreover, their results indicate that the vast majority of people leaving JSA end up in unknown destinations, suggesting that sanctions may have had a minimal impact of labour market outcomes but may -as seen in other contexts -have increased welfare exit (Arni, Lalive and Van Ours 2013). ...
... Sanctions are increasingly used to encourage labour market activity among both those who are directly sanctioned and those who may be sanctioned if they do not comply with the conditions associated with receipt of social security (Venn 2012). There is also some evidence that sanctions increase the rates of re-employment (Abbring, van den Berg and van Ours 2005, Boockmann, Thomsen and Walter 2014), even if they also appear to be associated with lower wages upon re-entry, shorter spells in work, and greater welfare exit (Arni, Lalive and Van Ours 2013, Fording, Schram and Soss 2013, Hofmann 2012. However, few studies have considered how sanctions affect the labour market outcomes of specific groups exposed to sanctions and conditionality (Markussen, Roed and Schreiner 2015). ...
Article
Full-text available
Imposing financial penalties on claimants of unemployment insurance may incentivise labour market re-entry. However, sanctions may have differential effects depending on the work-readiness of the claimants. Here, I explore whether sanctioning disabled claimants is associated with greater labour market activity or inactivity among disabled people data on 346 British local authorities between 2009 and 2014. When the number of sanctioned disabled claimants rises (as a proportion of all claimants), the disability rate among economically inactive people becomes larger. There is no clear relationship between sanctioning disabled claimants and the employed disability rate.
... Recently, this rather optimistic view has been challenged by empirical evidence highlighting a negative impact on job quality. Arni et al. (2013) as well as Van den Berg and Vikström (2014) rely on Swiss register data and detect a negative influence on post-unemployment wages, job stability, occupational level and the probability to move to part-time jobs. ...
... Whenever a positive (negative) effect is found on one indicator, a positive (negative) one is reported for other indicators, too. This holds true for different research contexts such as unemployment benefits (Van Ours and Vodopievic, 2008) or sanctions (Arni et al., 2013;Van den Berg and Vikström, 2014) as well as different countries. Since the programme under discussion was executed in the German context, it is particularly important to note that this pattern of consistency has been explicitly confirmed by two studies using data from the German context, too (Caliendo et al., 2013;Gangl, 2004). ...
Article
Unemployment has severe consequences that persist over the life course, including higher risk of future unemployment and worse employment conditions. While the existence of scarring effects has become conventional wisdom, labour market sociologists have pointed out that their magnitude differs between institutional contexts. Recently, the focus of the discussion has shifted towards the role of activation policies, which are suspected to speed up labour market integration but worsen reemployment quality, hereby deepening the scarring effects of unemployment. To contribute to this discussion, this article provides an analysis of the impact of a large-scale counselling and monitoring scheme on unemployed workers by means of matching/weighting analyses. In contrast to sanctions, the counselling and monitoring programme fosters labour market integration without impairing job quality. Apparently, activation programmes pose a danger of impairing job quality, but this negative effect can be avoided for programmes based on more emphatic governance principles.
... Actual benefit reductions lower the quality of postunemployment jobs both in terms of job duration as well as in terms of earnings. On this basis Arni et al. concludes that the net effect of a benefit sanction on post-unemployment income is negative (Arni, Lalive, and van Ours 2009). ...
... Several studies have investigated the effectiveness of sanctions in Denmark as an instrument to move unemployed people away from welfare benefits. The research mirrored findings from other parts of the world (Arni, Lalive, and van Ours 2009;Berg, Klaauw, and van Ours 2004;Bong, Slack, and Lewis 2004). Sanctions were generally found to be an effective tool of active employment policy. ...
Article
Full-text available
Over several decades, there has accumulated a large body of research on active labor market policies (ALMP). In particular, numerous programs designed to encourage welfare recipients to move into work and off benefits have been evaluated in western countries such as Denmark. The results of the research have been selectively influential in shaping policy developments, but as this paper will demonstrate, there are several biases attached to this research. Based on an extensive mapping review of both Danish and international literature, this paper contributes with a systematic overview of the current research within the field. By focusing on the range of these studies (in design, populations covered and substantive issues addressed), the review looks beyond the specific results of each study, and illuminates substantial gaps in the knowledge produced. The analysis shows that the research is lacking sensitivity toward the complexity of the field, in particular regarding the diversity of the clients being served and the variety of challenges they confront.
... Threat effects, for example, will be ineffective if they simply lead to a direct substitution of formal for informal job-search methods (van den Berg and van der Klaauw, 2006). Job-search theory provides inconclusive predictions with regard to post-unemployment outcomes such as job quality (Arni et al., 2013;van den Berg and Vikström, 2014). Shorter unemployment durations may help individuals secure work at their pre-unemployment occupational level, which might be expected to have beneficial implications for initial wages, future earnings and job stability. ...
... However, sanctions may encourage individuals to lower their wage expectations to find work, therefore increasing the likelihood that they will accept lower quality jobs than they would otherwise secure. Arni et al. (2013) also argue that sanctions policy could increase transitions out of the labour force itself, though it is unclear how prevalent this effect is expected to be or how long it might last. ...
Preprint
[Published version (Open Access) available at: http://dx.doi.org/10.1017/S0047279421001069] In recent decades, the use of conditionality backed by benefit sanctions for those claiming unemployment and related benefits has become widespread in the social security systems of high-income countries. Critics argue that sanctions may be ineffective in bringing people back to employment or indeed harmful in a range of ways. Existing reviews largely assess the labour market impacts of sanctions but our understanding of the wider impacts is more limited. We report results from a scoping review of the international quantitative research evidence on both labour market and wider impacts of benefit sanctions. Following systematic search and screening, we extract data for 94 studies reporting on 253 outcome measures. We provide a narrative summary, paying attention to the ability of the studies to support causal inference. Despite variation in the evidence base and study designs, we found that labour market studies, covering two thirds of our sample, consistently reported positive impacts for employment but negative impacts for job quality and stability in the longer term, along with increased transitions to non-employment or economic inactivity. Although largely relying on non-experimental designs, wider-outcome studies reported significant associations with increased material hardship and health problems. There was also some evidence that sanctions were associated with increased child maltreatment and poorer child well-being.
... Außerdem hätte eine Wirkungsmessung nicht die reinen Abgangsquoten in Beschäftigung, sondern auch deren Verweildauer oder Ausbildungsadäquanz zu berücksichtigen. Eine Ausnahme ist hier die Studie von Arni et al. (2009), deren Ergebnisse für die Schweiz verdeutlichen, dass zwar durch Sanktionen oder deren Androhung der Abgang aus dem Bezug beschleunigt wird, aber dauerhafte negative Effekte für den Verdienst in der neuen Beschäftigung und die Beschäftigungsstabilität bestehen. Einen interessanten Einblick zu Selektionseffekten bei Sanktionierungen geben Hasenfeld et al. (2004) für vier Bezirke in Kalifornien. ...
Article
Das Stigmabewusstsein Arbeitsloser ist ein bisher weitgehend unerforschtes Feld. Dieser Artikel untersucht unter Verwendung von quantitativen und qualitativen Daten ( Mixed Methods ) den Zusammenhang zwischen dem Erleben von Sanktionen im Vermittlungsprozess und dem Ausmaß, in dem die Betroffenen glauben, aufgrund von Arbeitslosigkeit stigmatisiert zu sein. Die quantitative Analyse zeigt, dass Sanktionen nicht mit dem Stigmabewusstsein aufgrund von Arbeitslosigkeit korrelieren. In anschließenden, komplementären Analysen von qualitativen Daten werden vier Mechanismen herausgearbeitet, die erklären können, warum erwartete signifikante Korrelationen zwischen der konkreten Sanktionierung und dem Stigmabewusstsein ausbleiben. Ein zentraler Faktor ist hier die weite Verbreitung und ständige Androhung von Sanktionen.
... 2 For corresponding studies in the context of sanctions in UI systems see, Arni, Lalive and van Ours (2013), van den Berg and Vikström (2014) and van den Berg, Hofmann and Uhlendorff (2015). Their results suggest that jobs found after the imposition of a sanction go along with lower wages and are less stable. ...
... Caliendo et al. (2013) account for selectivity by estimating a bivariate hazard model jointly with wages, and allowing for unobserved heterogeneity. 8 This section borrows from a similar section in Arni et al. (2013). 9 See Gerfin and Lechner (2002) and Lalive et al. (2008) for detailed background information on and an evaluation of the active labor market programs. ...
Article
Full-text available
We study how a reduction in potential benefit duration (PBD) affects employment and earnings of job seekers before and after unemployment benefits exhaust. Reducing PBD induces job seekers to become less selective and accept jobs earlier, which can worsen or improve labor market outcomes. We study a 2003 reform that reduces PBD from 24 to 18 months for job seekers younger than 55 years in Switzerland. Using older job seekers as a control group, we find that reducing PBD increases employment and earnings even after unemployment benefits have run out. Employment and earnings increase particularly strongly for job seekers who previously worked in industries with high R&D expenditures, industries where job seekers’ skills can depreciate rapidly.
... Individuals who believe they are at high risk of unemployment should reject demanding ALMPs more decidedly than individuals with secure employment prospects (Hypothesis 1c). Instead, individuals suffering low levels of labour market risk should prioritise the reduction of welfare expenditures and consequently taxes, over suboptimal individual matches in terms of quality, skills and the pay of the new job (Svarer, 2011;Arni et al., 2013) and thus favour demanding policies. ...
Article
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The literature addressing attitudes about social policy and the welfare state has been telling us for decades that welfare interventions are supported by those individuals who benefit from a specific measure. The diffusion of ‘demanding’ active labour market policies (ALMPs), however, challenges this relationship. Using a novel dataset, I analyse which individual- and country-level factors explain public support for demanding ALMPs in five Western European countries. The results show that labour market risk and ideological orientation influence public attitudes towards these ALMPs. Thereby, unemployed individuals sympathising with the political right are more strongly opposed to demanding measures than employed individuals with the same political preferences. Moreover, aggregate support is found to be correlated with the country's ALMP legacy, varying from high levels in Germany and the UK to low levels in Denmark and France. The findings suggest that most ALMPs are in fact implemented despite the opposition of their beneficiaries.
... However, these people will be unable to help out when they also lack sufficient income. Assuming that sanctioned recipients of social assistance living in a country that shows high risks of social exclusion and poverty have more difficulty in finding financial 7 However, these studies have also shown that benefit sanctions lower the quality of post-unemployment jobs, both in terms of duration and in terms of earning (Arni et al., 2013), and that sanctions are less effective after a relatively short period (Svarer, 2011). help in their informal network compared to those living in a country that shows low risks of social exclusion and poverty, it can be argued that the former recipients will be at greater risk of lacking means of subsistence. ...
... Sanctions are also imposed for failure to take offered work, encouraging people to accept the first opportunity rather than waiting for a better future opportunity. Yet, quantitative studies examining employment outcomes have found mixed results, potentially because they increase the quantity not the quality of the job search and fail to take into account the nature and supply of employment opportunities available (Arni et al., 2013;Webster, 2016;Boockmann et al., 2014;Lalive et al., 2005;van der Klaauw and Van Ours, 2013). There are also concerns about the fairness of the practice (Work and Pensions Committee, 2015), given evidence that disadvantaged groups are more likely to be sanctioned than others and that sanctions may actually reduce re-employment among particular vulnerable groups (Reeves and Loopstra, 2017;Comptroller and Auditor General, 2016). ...
Article
Full-text available
Since 2009, the UK has witnessed marked increases in the rate of sanctions applied to unemployment insurance claimants, as part of a wider agenda of austerity and welfare reform. In 2013, over one million sanctions were applied, stopping benefit payments for a minimum of four weeks and potentially leaving people facing economic hardship and driving them to use food banks. Here we explore whether sanctioning is associated with food bank use by linking data from The Trussell Trust Foodbank Network with records on sanctioning rates across 259 local authorities in the UK. After accounting for local authority differences and time trends, the rate of adults fed by food banks rose by an additional 3.36 adults per 100,000 (95% CI: 1.71 to 5.01) as the rate of sanctioning increased by 10 per 100,000 adults. The availability of food distribution sites affected how tightly sanctioning and food bank usage were associated ( p < 0.001); in areas with few distribution sites, rising sanctions led to smaller increases in food bank usage. In conclusion, sanctioning is closely linked with rising food bank usage, but the impact of sanctioning on household food insecurity is not fully reflected in available data.
... A range of European econometric and quasi-experimental studies show that stricter job search and program requirements, monitoring, and the threat or imposition of sanctions, increase the rate at which people leave unemployment benefits and enter employment (Kluve, 2006). Detailed findings from a number of the studies suggest specifically that both the threat and experience of sanctions increases employment transitions (see, for example, Arni et al (2009) for Switzerland; and Roed and Westlie (2007) for Norway). Hofmann's study of unemployed German claimants found, over the period studied, a comparatively low incidence of sanctions, but that when implemented they had "on average" a "positive effect on the employment outcome" (Hofmann, 2008, p.22). ...
Technical Report
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This research and evidence review was commissioned by the World Bank in partnership with the Human Resources Development Fund, Ministry of Labor, Kingdom of Saudi Arabia. The research paper briefly outlines the design and delivery of the Hafiz benefit system and employment services in the Kingdom of Saudi Arabia. It then considers the impact of cash benefits and employment services on work incentives in OECD countries and the related design of unemployment benefit eligibility rules, activation requirements, and financial sanctions. The following section considers the design of an employment focused activation system and the role of profiling and service interventions during a period of unemployment. The final section reviews the increased role that information and communication technologies are playing in individual job search and the delivery of employment services. This public version of the paper does not give the detailed recommendations that were provided for the Kingdom of Saudi Arabia.
... Ideally our study would replicate the approach used by Arni et al. (2013) for Switzerland. They used a very comprehensive administrative dataset with information on claimant destinations after leaving unemployment, plus information on their earnings two years after exit. ...
Article
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The dominant view among British policy-makers is that benefit sanctions for the unemployed who are claiming the Job Seeker's Allowance (JSA) are effective at increasing flows from unemployment into sustainable employment. This paper tests this theory using aggregate cross-sectional data for Great Britain for the period May 2001 to December 2014. Descriptive analysis found the relationship between sanctions and labour market outcomes was ambiguous, while trends in labour market outcomes were highly correlated with labour market demand. Multivariate SVAR time-series analysis, controlling for labour market demand, found evidence that changes in the threat and use of sanctions had a positive impact on flows into work in the short run but not in the long term, and had no definitive impact on ILO unemployment at all. Interrupted time-series analyses suggest we cannot reject the null hypothesis that the impact of introduction of a new JSA sanctions regime in October 2012 (with higher financial penalties associated with being sanctioned) had no impact on flows into work from JSA. In Britain, intensifying the use of sanctions and introducing harsher penalties associated with being sanctioned has been largely ineffective at increasing flows from JSA into sustainable employment. Given the negative financial and social impacts of sanctions on those affected, and the lack of evidence of a sustained positive impact on employment, the basis for the new sanctions policy is unclear.
... Cannabis use is not the only context in which such methods are used. In labor economics literature, Abbring et al. (2005), Arni et al. (2013) Richardson and van den Berg (2013) who study the effect of labor market training on the job finding rates of Swedish unemployed workers. 5 Note that the expectation about the effect of past use on opinions is not very clear. ...
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We investigate the determinants of the support for cannabis legalization finding a causal effect of personal experience with cannabis use. Current and past cannabis users are more in favor of legalization. We relate this finding to self-interest and inside information about potential dangers of cannabis. While the self-interest effect is not very surprising, the effect of inside information suggests that cannabis use is not as harmful as cannabis users originally thought it was before they started consuming. Our analysis suggests that as the share of cannabis users in the population increases, support for cannabis legalization will also increase.
... More generally, whilst activation programmes may, by a small number of percentage points, increase the speed at which jobseekers find work, this is counter-balanced by the temporary nature of the work that is found (Arni et al., 2013). Activation programmes disrupt job search (Griggs and Evans, 2010) and often result in people taking jobs below their skill level, and never climbing back up (van den Berg and Vikström, 2009). ...
Article
Many developed countries consider that disability benefit receipt is too high and more disabled people should be in paid work. Employment programmes designed to achieve this have tended towards less financial support and more requirement to engage in activity. But emphasis on social inclusion through paid work coupled with inadequate benefits and mandated activity can cause distress and worsened health. It is therefore vital that politicians understand the likely impact of employment programmes before introducing them. In this article, a new framework based on five ‘Ds’ (diagnosis, destination, development, design and delivery) is used to analyse the UK’s Work and Health Programme. It is shown that the programme is likely to fail: it includes measures that do not work, and may cause harm, whilst ignoring measures that are known to work. Based on this, it is recommended that this programme be scrapped and the government start listening to disabled people.
... Having a job is crucial for our wellbeing, but the quality of that job and its impact on our lives is also important and has been found to be associated with both mental and physical health [7]. Research in Switzerland [19] found that using negative incentives in activation-focused LMP (ALMP) led to lower quality post-unemployment jobs, both in terms of job duration and level of earnings. Studies have also shown that work of poor psychosocial quality can have long-term health impacts [20] which can be significantly worse than long-term unemployment itself. ...
Article
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Background: Labour market policy (LMP) and its implementation have undergone rapid change internationally in the last three decades with a continued trend towards active LMP. In Ireland however, this shift has been more recent with ongoing reforms since 2012 and a concomitant move toward active labour market 'work-first' policy design (i.e. whereby unemployed people are compulsorily required to work in return for their social welfare benefits). Labour market policies vary from those that require this compulsory approach to those which enable the unemployed to move towards sustainable quality work in the labour market through upskilling (human capital approach). Despite this, however, long-term unemployment-a major cause of poverty and social exclusion-remains high, while current employment support approaches aimed at sustainable re-employment are, arguably, unevaluated and under examined. This study examines the effectiveness of a new high support career guidance intervention in terms of its impact on aspects of wellbeing, perceived employability and enhancing career sustainability. Method: The study involves a single-centre randomised, controlled, partially blinded trial. A total of 140 long-term unemployed job-seekers from a disadvantaged urban area will be randomly assigned to two groups: (1) an intervention group; and (2) a 'service as usual' group. Each group will be followed up immediately post intervention and six months later. The primary outcome is wellbeing at post intervention and at six-month follow-up. The secondary outcome is perceived employability, which includes a number of different facets including self-esteem, hopefulness, resilience and career self-efficacy. Discussion: The study aims to assess the changes in, for example, psychological wellbeing, career efficacy and hopefulness, that occur as a result of participation in a high support intervention vs routinely available support. The results will help to inform policy and practice by indicating whether a therapeutic approach to job-seeking support is more effective for long-term unemployed job-seekers than routinely available (and less therapeutic) support. The findings will also be important in understanding what works and for whom with regard to potentially undoing the negative psychological impacts of unemployment, building psychological capital and employability within the individual, and developing career trajectories leading to more sustainable employment. Trial registration: ISRCTN registry, ISRCTN16801028 . Registered on 9 February 2016.
... Klepinger, Johnson and Joesch (2002) evaluated the impact of different job-search requirements in a US programme, and found that variations of the programme with the strongest requirements decreased the duration of insured unemployment but did not increase job finding. There is also empirical evidence that although monitoring and sanctions can accelerate the return to work, they may also decrease the quality of accepted jobs (Arni, Lalive and Van Ours, 2013). ...
Preprint
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Proactive labour market policies consist of active labour market measures or other interventions that are implemented pre-emptively, with the aim of protecting people against a wide range of labour market problems and economic shocks. Proactive policies will be important in facing the challenges of the future of work. The discussion is based on a review of effective active labour market policies (ALMPs) including training, public works, direct job creation, employment incentives and job counselling and other labour market services; specifically, it examines how ALMPs and their integration with income support programmes can be used in a proactive manner. Throughout the paper, differences between developed and developing and emerging countries are considered. The paper suggests that policy implementation is crucial for a proactive approach, which can permit the use of complementary policies and programmes with proactive and reactive features that support activation of the labour force. It argues that social dialogue may enhance the role of implementation variables, especially tripartite social dialogue at an aggregate level. A combination of policies in the context of social protection floors for developing countries and activation strategies for developed countries can also help in the transition to an effective proactive approach.
... Sanctions are temporary reductions in unemployment benefits when job seekers do not comply with their job seeker obligations, such as search and meeting duties. Ample empirical evidence confirms that stricter sanction regimes and even the credible threat of being sanctioned increase the job-finding rate (see van den Berg et al., 2004;Abbring et al., 2005;Lalive et al., 2005;Boone et al., 2009) although van den Berg et al. (2014); Arni et al. (2013) imply that sanctions should not be set discouragingly high to achieve the desired outcome. We confirm this notion for our sample within a simple exploratory analysis where we regress contemporaneous job finding on previous sanction activities (see Figure A.4 in Appendix A.4). ...
Thesis
Über die letzten zwölf Jahre sind globale Indikatoren für Demokratie- und Freiheitsrechte kontinuierlich gesunken. Demokratie ist eine wichtige Triebkraft für wirtschaftliche Entwicklung, daher folgen aus diesem Vertrauensverlust auch Sorgen über die Zukunft des ökonomischen Wohlstandes. Diese Dissertation besteht aus drei Essays und untersucht mögliche Reformen für effektivere politische Gestaltungsmöglichkeiten in demokratischen Systemen: Dezentralisierung und Privatisierung. Das erste Essay überprüft, ob durch Dezentralisierung der öffentlichen Arbeitsvermittlung mehr Arbeitslose in freie Stellen vermittelt werden können. Dafür untersuche ich die Kommunalisierung deutscher Jobcenter im Jahr 2012. Dabei stelle ich fest, dass sich durch Dezentralisierung die Neuanstellung von Arbeitslosen um rund 10% verringern. Es zeigt sich, dass dezentralisierte Arbeitsvermittlungen vermehrt öffentlich geförderte Arbeitsbeschaffungsmaßnahmen nutzen. Das zweite Essay beschäftigt sich mit finanzpolitischen Wechselwirkungen zwischen Gemeinden in Kolumbien, wo die Verantwortlichkeit für einen großen Teil des Staatsbudgets an die kommunale Regierungsebene übertragen wurde. Es ergeben sich starke räumliche Autokorrelationen im lokalen Ausgabeverhalten. Allerdings zeigt sich durch einen Instrumentalvariablenansatz, dass es keine kausalen fiskalischen Interaktionseffekte zwischen den Gemeinden gibt. Das dritte Essay analysiert, ob Regierungen ökonomischen Effizienzüberlegungen folgen, wenn sie entscheiden, welche staatlichen Firmen für eine Privatisierung ausgewählt werden. Basierend auf der Massenprivatisierung in Folge des Falls der Berliner Mauer untersuche ich Firmendaten, welche mehr als 6.000 Privatisierungs- und Liquidationsentscheidungen umfassen. Die Ergebnisse legen nahe, dass Privatisierungsentscheidungen weniger politisch, sondern stärker ökonomisch orientiert sind, als dies durch bisherige Studien bekannt ist.
... With reference to the impact of benefit sanctions, Lalive et al. (2005) investigate effects for the Swiss labour market with a focus on warnings and enforcement. Another study on the same market, Arni et al. (2013) similarly evaluates the effects of benefit sanctions on post-unemployment outcomes. For the Danish labour market, Svarer (2011) investigates the impact of benefit sanctions by looking at the exit rate from unemployment for unemployed insured individuals. ...
Article
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The purpose of this paper is to simultaneously investigate whether the active labour market programmes (ALMPs) and the imposition of benefit sanctions help unemployed insured workers in Denmark to find a job sooner than those who do not get any activation. Earlier studies have modelled ALMPs and benefit sanctions separately, which may have resulted in over- or underestimation of the true effect. As part of our empirical methodology, we used a multivariate mixed proportional hazard model and optimally selected the number of support points for the specification of unobserved heterogeneity distribution in our sample. Our results revealed that the impositions of both benefit sanctions and employment subsidies in the private sector have a positive impact on reducing unemployment duration. Some policy implications are drawn.
... However, adequate unemployment benefits may improve the quality of job matches and increase wages [24] . Furthermore , benefit sanctions and warnings have been found to not only increase exit from unemployment, but also exit into non-employment, and to lower the quality of the jobs found both in terms of their duration and levels of pay [26]. Sickness benefits can be seen as an alternative to unemployment benefits for people with health problems. ...
Article
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Background Employment and unemployment are key determinants of health inequalities and should be a priority when discussing policies to reduce such inequalities. Our aim is to investigate how flexicurity policies across European countries impact on the employment chances for people with low education and activity limitations. Methods The longitudinal EU-SILC dataset, pooled 2005–2010, was used to calculate labour market outcomes. The sample consisted of 25 countries and 19,881 individuals. The employment transitions of non-employed people with activity limitations was followed from one year to the next, and the outcomes were rates of return-to work (RTW) among those with low education, and relative equality of RTW between those with low and high education (rate ratio, RR).Data on flexicurity policy and labour market factors were accessed from Eurostat and the OECD. As policy data was only available for OECD countries, the sample was reduced to 21 countries. Fuzzy-set QCA (Qualitative Comparative Analysis) was used to examine how different combinations of the components of flexicurity were linked to the two outcomes. ResultsWhere high rates of RTW were achieved, high employment rates were always present. In five countries (the Nordic countries and the Netherlands) these factors coexisted with high expenditure on active labour market policies and social services in old age. In three others (The Czech Republic, UK and Estonia) they were combined with low employment protection and low benefit expenditure. For equality in RTW, low unemployment rates were combined with either high benefit expenditure, or low employment protection. Conclusion We found two routes that lead to high RTW: we characterise these as the high road and the low road. Taking the low road (relaxing employment protection and limiting benefits) may be a tempting option for poorly performing countries. However, without measures to stimulate female employment it may not be enough as high overall employment is so important in enabling people with activity limitations to access the labour market. To achieve equality in RTW, it seems that as long as unemployment is low, either flexibility or security is sufficient.
... More generous benefits with longer entitlements tend to increase unemployment duration (for a review seeTatsiramos and Van Ours, 2014). Sanctions or job search requirements can reduce the disincentives set by unemployment benefits(Abbring et al., 2005;Arni et al., 2012;Bover et al., 2002;van den Berg et al., 2017). Furthermore, active labour market policies affect re-employment chances of participants (seeCard et al., 2010 for a meta analysis). ...
Article
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While flexible labour markets offer employment opportunities for unemployed individuals, they might not foster stable employment. This paper studies the determinants of unemployed welfare recipients’ transitions into employment and its stability in Germany. The analyses are based on an inflow sample of welfare recipients from large‐scale administrative data and semi‐parametric hazard models with individual‐level frailty. Some labour market segments offer quick employment entry but not sustainable employment. While human capital is positively related to employment take‐up and stability for both sexes, the role of several sociodemographic determinants differs by gender.
... The analysis of the essence of globalization suggests the following trends: reducing the boundaries of national states, increasing the role of supranational authorities and large transnational enterprises, etc. Negative features of globalization can be eliminated by wellorganized regulatory instruments. Analysis of the experience of overcoming crisis phenomena in Europe shows, firstly, that labour resources play one of the key roles in the modern world, and secondly, certain measures aimed at activating different segments of the population in different kinds of activities give positive results to the development of the economic system [4,5,6]. ...
Article
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The labour market is a special market of means of production, which requires special attention, since the subject of exchange is the ability of people to work, skills and knowledge of a person. The welfare of the population, its purchasing power, level of income and, in the end, the standard of living depends on the efficiency of the exchange at the market. The issue of unemployment is one of the key issues in the state regulation of the labor market, which causes a decrease in household incomes and the general population, a decrease in the welfare of the nation and in general the gross domestic product. Scientists distinguish several types of unemployment on various grounds: reasons, structure and period, etc. But one of the topical problems of the present, with a tendency towards rising retirement age, observed in both developed and developing countries, is youth unemployment. That entails a set of problems: the inadequacy of education with the current requirements of the labour market, the lack of vacancies, and the increase of retirement age employees delays the term of retirement, thus not freeing jobs, etc.
... That is, while some studies find no significant relation (Lalive, 2007;Van Ours and Vodopivec, 2008;Le Barbanchon, 2016) or a negative relation (Petrongolo, 2009;Schmieder et al., 2016), the majority of studies find a positive relation between UI generosity and job quality in terms of wages and employment stability, suggesting that reducing UI generosity lowers job quality (e.g. Centeno, 2004;Arni et al., 2013;Caliendo et al., 2013;Nekoei and Weber, 2017). ...
Article
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Liquidity constraints prompt the unemployed to intensify their job search, but does that produce better labour market outcomes? Using longitudinal Australian data, we test the effect of objective proxy indicators of liquidity constraints on job search and concomitant labour market outcomes. We find that liquidity constraints, specifically their severe form ‘hardship’, intensify job search without improving short‐run employment outcomes or objective job quality (if a job is secured), whereas subjective job quality outcomes are worse. Moreover, we find evidence that the quit intention is higher and the concomitant medium‐run employment stability is lower for those who found jobs facing hardship.
... Työttömyysturvan sanktiot ovat määräaikaisia työttömyysturvan menetyksiä tai leikkauksia, joiden perusteena on esimerkiksi työttömän henkilön työstä tai työvoimapoliittisesta koulutuksesta kieltäytyminen. Sanktion saaneet työttömät henkilöt, verrattuna ei-saaneisiin henkilöihin, usein vastaanottavat töitä, joissa ansiot tai palkkataso ovat alhaisemmat ja työn kestot lyhyempiä (Van den Berg and Vikström 2014;Arni et al. 2013). Van den Berg ja Vikström (2014) lisäksi havaitsevat, että Ruotsissa sanktion saaneet työttömät usein tekevät osa-aikatöitä ja siirtyvät alhaisemmalle ammattitasolle.Eri toimenpiteiden vaikutukset eroavat ajallisesti. ...
Research
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Ammatillinen liikkuvuus on erittäin tärkeää työvoiman kohtaannon ja saatavuuden kannalta. Liikkuvuuden merkitys korostuu erityisesti voimakkaasti muuttuvassa ympäristössä. Se, kuinka helposti henkilö voi vaihtaa toimialalta ja ammatista toiseen määrittää, kuinka nopeasti talous kehittyy ja muuntautuu uusien tilanteiden edessä ilman työvoiman saatavuusongelmia. Ammatilliseen liikkuvuuteen liittyy kuitenkin kustannuksia, koska aikaisemmassa ammatissa hankittua osaamista ei välttämättä voida hyödyntää uudessa ammatissa. Tässä hankkeessa ammatin vaihtamisen esteitä tarkasteltiin erityisesti ammattien tehtäväsisältöjen eron näkökulmasta. Tehtävien erilaisuus vaikuttaa henkilöiden mahdollisuuksiin vaihtaa ammatista toiseen, mutta osa aikaisemmasta osaamisesta on hyödynnettävissä myös uudessa ammatissa. Tiedollisten taitojen erot ammattien välillä estävät Suomessa ammatillista liikkuvuutta vähemmän kuin erot ammattien tehtäväsisällöissä. Tiedollisten taitojen eroihin liittyy kuitenkin suurempia palkan menetyksiä irtisanotuilla, kun siirrytään matalamman taitotason ammattiin. Koulutuspolitiikassa tarvitaan erilaisia ratkaisuja riippuen henkilöiden lähtö- ja tavoiteammateista, koska osaamiserot vaihtelevat. Teknologian kehittyessä osaamisvaatimukset kasvavat, joten koulutustason nostaminen yleisesti ylläpitää työntekijöiden työskentelymahdollisuuksia erilaisissa ammateissa. Kohtaanto-ongelman ratkaisemisessa tarvitaan aikaisempaa enemmän aktiivisen työvoimapolitiikan välineiden hyödyntämistä, kuten työhaun ohjausta henkilölle mahdollisiin hakukohteisiin sekä uudelleenkoulutusta. Työnvälitystä on mahdollista tehostaa kustannustehokkaasti hyödyntämällä digitalisaatiota sekä ammattien välisiin tehtäväeroihin ja aikaisempiin ammatillisiin siirtymiin liittyvää tietoa hakukohteiden valinnassa.
... They may attend enough sessions to avoid being counted as a formal 'dropout', but these 'completers' are not fully treated. This may happen because of circumstances beyond their control (travel, personal circumstances etc.) or because the ALMP context makes 'observed' dropout undesirable (see, for instance, Arni et al., 2013;Boockmann et al., 2014), due to the financial incentives facing training providers and/or sanction regimes for the unemployed. ...
Article
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This study utilises an exceptionally rich English administrative dataset, to estimate employment impacts from training voluntarily initiated by unemployed individuals. A Coarsened Exact Matching approach is adopted, in a dynamic evaluation framework, to estimate impacts up to 5 years from training start. We identify economically and statistically significant impacts, estimated separately for (i) all training starters, (ii) the partially, and (iii) fully treated. Investigation of possible endogenous selection into partial/full treatment, using distance to training provider as an instrumental variable, suggests inclusion of extensive employment and learning histories in a matching framework, justifies invocation of the conditional independence assumption for comparisons of full/partial treatment. The partially treated secure a return that is, on average, 2 percentage points lower than full treatment. Thus, an 'intention to treat' approach would not alter conclusions on the efficacy of training; but using the partially treated to estimate counterfactual outcomes risks understating returns.
... While evaluations of active labour market programs show that policy instruments such as job search obligations under the threat of sanctions can reduce the number of people claiming unemployment benefits, the evidence is more mixed on whether they move people into work. For example, in an early study comparing post-unemployment outcomes between sanctioned and non-sanctioned jobseekers in Switzerland over the period 1998-2003, Arni et al. (2013) found that the exit rate from benefits to non-employment was more than double among jobseekers who experienced or were threatened with a payment penalty. Similarly, in a UK study, Petrongolo (2009) found that the introduction of jobsearch conditionality requirements in the late 1990s had a significant impact on the short-term exit rate from unemployment benefits. ...
... Card et al., 2018;Gerfin und Lechner, 2002;Kluve, 2010). Vergleichsweise wirksam bezüglich der Dauer von Arbeitslosigkeit sind (angekündigte als auch ausgesprochene) Sanktionen, aber diese Massnahmen zielen offensichtlich nicht auf den Aufbau von Humankapital (Arni et al., 2013;Lalive et al., 2005). ...
Research
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[English below] Der vorliegende Bericht beschreibt, wie sich die individuellen Chancen und Risiken auf dem Schweizer Arbeitsmarkt für Personen mit unterschiedlichen Bildungsverläufen unterscheiden -- und wie sich diese Unterschiede über die letzten 20 bis 25 Jahren verändert haben. In einem ersten Schritt zeichnen wir anhand von verschiedenen Datenquellen die Veränderung in der Bildungsstruktur über diesen Zeitraum nach. Dabei zeigen sich deutliche Veränderungen, insbesondere hat sich der Anteil an Personen mit einem Abschluss auf Tertiärstufe deutlich erhöht. Im Hauptteil der Studie wird die individuelle Beschäftigungs- und Lohnsituation von Personen mit unterschiedlicher Bildung beschrieben und mit der subjektiven Einschätzung der Arbeitssituation durch die Erwerbstätigen ergänzt. Wir beschreiben in einem ersten Schritt die Integration von Personen mit unterschiedlichen Bildungsverläufen in den Arbeitsmarkt. Wir finden für diese Merkmale einerseits deutliche Unterschiede zwischen verschiedenen Bildungsgruppen, andererseits lassen sich über die Zeit nur wenig nennenswerte Veränderungen feststellen. Ein ähnliches Muster lässt sich bezüglich des durchschnittlichen Lohnsatzes nach Bildungsgruppe beobachten. Wir finden einerseits sehr deutliche Unterschiede im Medianlohn zwischen Personen mit unterschiedlichem Bildungsabschluss, andererseits sind diese Lohnunterschiede über die Zeit erstaunlich stabil. Dies gilt darüber hinaus nicht nur für den Medianlohn, sondern beinahe analog auch für die jeweiligen Tief- und Hochlöhne in den verschiedenen Bildungsgruppen. Der Vergleich mit der Veränderung der aggregierten Lohnverteilung legt zudem nahe, dass der Anstieg im aggregierten Lohnsatz weniger auf steigende Löhne innerhalb der Bildungsgruppen, sondern auf die Erhöhung des Anteils Personen mit höheren Abschlüssen und gleichzeitig höheren Löhnen zurückzuführen ist. In einem weiteren Schritt dokumentieren wir, dass sich die Lohnverteilungen der verschiedenen Bildungsverläufe ebenfalls sehr deutlich überschneiden, was unter anderem auf grosse und über die Zeit persistente Lohnunterschiede zwischen verschiedenen Branchen zurückzuführen ist. Insgesamt lassen sich darüber hinaus kaum Hinweise auf eine Abwertung der berufsbildenden Abschlüsse im Beobachtungszeitraum finden. Betrachtet man die relative Lohnentwicklung, so führte der deutliche Anstieg höherer Abschlüsse zu einer relativen Abwertung aller Bildungsabschlüsse, was psychologisch bedeutsam ist und wiederum einen Anreiz darstellen kann, höhere Abschlüsse zu erwerben. Die Betrachtung der subjektiven Einschätzung der eigenen Arbeitssituation deutet schliesslich darauf hin, dass Beschäftigungs- und Lohnchancen die Wahrnehmung der Erwerbstätigen nur teilweise erklären können und dass deshalb Arbeitsmarktindikatoren alleine keine vollständige Beurteilung des individuellen Werts von Abschlüssen erlauben. [ENGLISH] This report describes how the individual opportunities and risks on the Swiss labor market vary for people with different educational pathways and qualifications – and how these differences have changed over the past 20 to 25 years. In a first stage, we outline the change in the educational structure over this period using different data sources. This reveals significant changes – the proportion of people with tertiary-level qualifications has risen significantly in particular. Behind this development lies a general trend towards higher qualifications, a shift towards immigrants holding tertiary degrees and an increasing level of female employment. The main part of the study looks at the employment and salary situation of people with different educational backgrounds, which is supplemented by the working population’s subjective assessment of their own employment situation. In a first stage, we describe the integration of people with different educational pathways into the employment market. While there are significant differences between various educational background groups, few notable changes are identified over the period. A similar pattern emerges in relation to the average pay level of the educational background groups. We find very significant differences in median pay between people with different educational qualifications, but pay differences are remarkably stable over the period. This does not just apply to average pay but also to the respective low and high pay levels in the various educational background groups in an almost identical way. A comparison of the change in aggregated salary distribution shows that the rise in the aggregated pay level is largely attributable to the increase in the proportion of people with higher qualifications and consequently higher salaries. In a further step, we document that the wage distributions of groups with different educational pathways overlap to a considerable degree, one of the reasons being that there exist significant and persistent pay differences between various sectors. Overall, there is little indication of devaluation of vocational education and training qualifications during the period under review. In terms of relative wage development, the increasing proportion of the workforce with higher qualifications resulted in an apparent devaluation of all educational qualifications. However, as the study also shows, there is no absolute devaluation of training/education but instead relative shifts in the structure of the qualifications of the workforce. Finally, the employment and pay opportunities associated with educational qualifications only have a limited impact on a person’s subjective satisfaction with their own employment situation. This indicates that objective labor market indicators – such as the risk of unemployment or level of pay – do not permit full evaluation of the individual value of educational qualifications.
... Furthermore, in the optimization process we account for possible degenerate distributions; see also Gaure et al. (2007a,b) for more details on the optimization approach. 24 Related to our setting, Arni et al. (2013) look at how sanctions and warnings affect subsequent employment stability and wages in Switzerland. 25 The estimator requires censoring, so we follow Donald et al. (2000) and assume that wages above the 99th percentile are censored. ...
Article
We provide comprehensive evidence on the consequences of automation risk on the career of unemployed workers and the mitigating role of labor market training. Using almost two decades of administrative data for Austria, we find that a higher risk of automation reduces the job finding probability; a problem which has increased over the past years. This development is associated with increasing re-employment wages and job stability. We also present new aspects of public training in times of technological progress. Provided training counteracts the negative impact of automation on the job finding probability. Its efficiency has declined over the past years, however.
... Where activity requirements improve job take-up among the unemployed population, low job quality in the form of low earnings, low educational requirements, or short employment duration is often the result (Arni et al., 2013;Petrongolo, 2009;Van den Berg & Vikström, 2014). However, parents may react differently from the unemployed populations analyzed in the above studies, which tend to comprise of individuals with stronger prior attachment to the labor market and who do not necessarily have children. ...
Article
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We review the empirical literature on the causal effects of welfare‐to‐work policies on the employment of low‐income parents and the intergenerational impacts on their children. We focus on welfare policies that change benefit levels, activity requirements, time limits, and in‐work benefits. These policies may affect children through several mechanisms, including changes in family income, time spent with parents, and attitudes towards work or welfare. To unpack these mechanisms and understand the net effects of these policies, we assess how the impact on children varies across outcomes, home environments and institutional settings. Overall, the literature shows that income tax credits are an attractive policy, simultaneously increasing employment and improving child development outcomes. In contrast, other policies that boost employment either have no or negative impacts on child development.
... The authors used the Swiss Labour Force Survey (SLFS) to study effect of firm size on wage differentials. Besides that, there is a rich literature on transitions into and out of unemployment (Lalive et al., 2005(Lalive et al., , 2008Arni et al., 2013;Eugster et al., 2017) but no literature on job changes. ...
... In sum, the idea of effective targeting remains essential for more favourable programme effects, but the selection mechanism employed here has not been rigorous enough. These results add to the growing literature on policy measures for long-term unemployed workers in general (Card et al. 2010;Kluve 2010;Arni et al. 2013;Arendt and Kolodziejczyk 2019) and the impact of JCS in particular (Caliendo et al. 2004(Caliendo et al. , 2005(Caliendo et al. , 2008Lechner and Wunsch 2009;Hujer and Thomsen 2010). At the methodological level, our results complement previous work that assesses the validity of non-experimental evaluations based on high quality register data Caliendo et al. 2017). ...
Article
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Previous evaluations of job creation schemes (JCS) reveal mostly negative employment effects, mainly due to inherent lock-in effects. In this paper, we assess the impact of an innovative JCS that employs a pre-selection mechanism to target programme participation on unemployed job seekers with very low integration chances, hereby reducing possible lock-in effects. Relying on high-quality administrative as well as survey data, we conduct regression-adjusted matching analyses to estimate the programme effect on integration into regular employment. Our results show that the programme did not succeed to foster labour market integration, but still entails remarkably negative employment effects in the first years after participation. We argue that this results from a principal-agent problem at the last step of the selection mechanism that may have led to cream-skimming rather than targeting on very hard to place workers. However, supplementary analyses reveal that negative effects can be avoided for subgroups with very poor employment chances in case of non-participation. These results are robust to the use of different matching estimators and definitions of non-participation. The inclusion of usually unobservable survey variables as well as placebo tests based on past employment outcomes refute concerns about endogenous selection. From a policy-perspective, these findings imply that targeting JCS on workers with very low integration chances is a key factor to avoid negative employment effects found in previous evaluations. At the methodological level, our analyses add to recent literature that assesses the credibility of non-experimental evaluations based on high-quality administrative data.
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In some countries including Germany unemployed workers can increase their income by working a few hours per week. The intention is to keep unemployed job seekers attached to the labour market and to increase their job-finding probabilities. To analyze the unemployment dynamics of job seekers with and without marginal employment, we consider an inflow sample into unemployment and estimate multivariate duration models. While we do not find any significant impact on the job finding probability in a model with homogeneous effects, models allowing for time-varying coefficients indicate a decreased job finding probability of marginal employment at the beginning of the unemployment spell and an increased job finding probability for the long-term unemployed. Our results suggest that job seekers with marginal employment find more stable post-unemployment jobs, and we find some evidence that the relationship between marginal employment and wages and employment stability varies with respect to skill levels, sector and labor market tightness.
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We use register data of 88,948 sick-listed workers in Denmark over the period 2008-2011 to investigate the effect of active labor market programs on the duration until returning to non-subsidized employment and the duration of this employment. To identify causal treatment effects, we exploit over-time variation in the use of active labor market programs in 98 job centers and time-to- event. We find that ordinary education and subsidized job training have significant positive employment effects. Subsidized job training has a large, positive effect on the transition into employment but no effect on the subsequent employment duration. In contrast, ordinary education has a positive effect on employment duration but no effect on the transition into employment. The latter effect is the result of two opposing effects, a large positive effect of having completed education and a large negative lock-in effect, with low re-employment chances during program participation.
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Technical Report
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The reintegration of young welfare recipients into the labour market is a major policy objective in many European countries. In this context, monitoring and sanctions are commonly used policy tools. We analyse the impact of strict sanctions for young welfare recipients whose institutional setting features sanctions for non‐compliance with job‐search requirements that effectively cancel benefits for a period of 3 months after detection. We consider effects on job‐search outcomes and on dropping out of the labour force, using administrative data on a large inflow sample. We estimate multivariate duration models taking selection on unobservables into account. Our results indicate an increased job entry rate at the expense of an increased withdrawal from the labour force and lower entry wages. Combining quantitative with qualitative evidence reveals that the latter side‐effects of sanctions can have dramatic consequences for the quality of life of the youths involved.
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Unemployed workers in Austria are allowed to top up unemployment benefits with a certain amount of earnings from employment without any benefit reduction. We do not find evidence that entering such “marginal employment” during unemployment acts as a stepping stone to regular employment. On the contrary, it tends to prolong the unemployment spell and hence reduces the time spent in regular employment within a 3-year period. Moreover, marginal employment during the unemployment spell leads to lower earnings. It inhibits the return to regular employment probably due to a high implicit tax rate on additional income.
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Universal Credit is the UK’s globally innovative social security reform that replaces six means tested benefits with one monthly payment for working age claimants - combining social security and tax credit systems. Universal Credit expands welfare conditionality via mandatory job search conditions to enhance ‘progression’ amongst working claimants by requiring extra working hours or multiple jobs. This exposes low paid workers to tough benefit sanctions for non-compliance, which could remove essential income indefinitely or for fixed periods of up to three years. Our unique contribution is to establish how this new regime is experienced at micro level by in-work claimants over time. We present findings from Qualitative Longitudinal Research (141 interviews with 58 claimants, 2014-17), to demonstrate how UC impacts on in-work recipients and how conditionality produces a new coerced worker-claimant model of social support. We identify a series of welfare conditionality mismatches and conclude that conditionality for in-work claimants is largely counterproductive. This implies a redesign of the UK system and serves as an international warning to potential policy emulators.
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Internationally, policymakers assume that sanctioning claimants of unemployment benefits will engender both improved employment outcomes and wider positive effects. A growing evidence-base challenges these expectations, though additional insight is needed from large-scale longitudinal research. This article contributes by conducting a quantitative investigation into the mental health impacts of benefit sanctions. To do so, it focuses on a recent period in UK sanctions policy in which rates of sanctions varied markedly and their length was substantially increased. Using quarterly panel data for local authorities in England (Q3 2010-Q4 2014) and fixed effects models that control for important confounders, the analysis provides robust evidence that Jobseeker's Allowance (JSA) sanctions lead to increases in self-reported anxiety and depression. Evidence of this adverse impact is particularly clear following the increase in the length of sanctions in October 2012. The results have important implications for contemporary social security policy, which is underpinned by a similarly punitive sanctions regime. Whilst additional individual-level research is needed to fully consider the causal relationships in operation , the findings support a precautionary approach that should seek to minimise the harm associated with sanctions. This implies taking steps to reduce both the severity and frequency of applied sanctions.
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This paper provides an overview of the design of means-tested Guaranteed Minimum Income schemes, which constitute an important component of social protection systems in European countries. It discusses how key design features differ across countries, including how countries balance the primary objective of poverty alleviation against the desire to both manage the work disincentives inherent in such programs and contain fiscal cost. The analysis finds a clear trade-off between both concerns in practice, with many countries combining low generosity with low benefit withdrawal rates (BWRs) thus prioritizing employment incentives over the primary objective of poverty alleviation. Many countries can reduce this trade off by combining higher generosity with higher BWRs. Countries with very high BWRs should consider reducing these, including through allowing income disregards and time dependent (rather than income-dependent) benefit withdrawal. The work disincentives associated with higher BWRs can also be attenuated through strengthening complementary activation policies that incentivize and support participation in the labor market.
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This paper presents new tests of the permanent income hypothesis and other widely used models of household behavior using data from the labor market. We estimate the excess sensitivity of job search behavior to cash-on-hand using sharp discontinuities in eligibility for severance pay and extended unemployment insurance (UI) benefits in Austria. Analyzing data for over one-half million job losers, we obtain three empirical results: (1) a lump-sum severance payment equal to two months of earnings reduces the job-finding rate by 8%-12% on average; (2) an extension of the potential duration of UI benefits from 20 weeks to 30 weeks similarly lowers job-finding rates in the first 20 weeks of search by 5%-9%; and (3) increases in the duration of search induced by the two programs have little or no effect on subsequent job match quality. Using a search-theoretic model, we show that estimates of the relative effect of severance pay and extended benefits can be used to calibrate and test a wide set of intertemporal models. Our estimates of this ratio are inconsistent with the predictions of a simple permanent income model, as well as naive rule of thumb behavior. The representative job searcher in our data is 70% of the way between the permanent income benchmark and credit-constrained behavior in terms of sensitivity to cash-on-hand. (c) 2007 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..
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In 1997, the Swiss government introduced active labor market programs on a large scale to improve the job chances of unemployed workers. This paper evaluates the effect of these programs on the duration of unemployment. Our evaluation methodology allows for selectivity affecting the inflow into programs. We find that in most cases the programs do not reduce the duration of unemployment. The exception is the program of temporary wage subsidies which reduces unemployment, but only for foreign workers. From a cost-benefit point of view, temporary wage subsidies seem to be the only program worthwhile pursuing.
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"In 2005, benefit sanctions in Germany were tightened with the introduction of the new means-tested unemployment benefit II (UB II), codified in Social Code (SC) II. This study analyzes the effect of benefit sanctions on the reservation wage of sanctioned unemployment benefit II recipients. The behavioral effect of a benefit sanction is an empirically open question. According to job search theory, benefit sanctions directly reduce reservation wages. To explore this hypothesis, propensity score matching is adopted. The dataset used is a unique survey of UB II recipients in the first year of SC II. For the identification of the effect, the study relies on the rich individual data and the rather unsystematic sanctioning process in the starting months after the introduction of the SC II. The timing of the sanction is explicitly considered by estimating the effects for the first four quarters of UB II receipt in 2005. The main result is that there was no significant effect of sanctions on the reservation wages of sanctioned unemployment benefit II recipients. A side result is that sanctioned UB II recipients were not more likely to be employed at the time of their interview either. Both results are robust to various matching estimators, estimation specifications and to the timing of the UB II sanction." (author's abstract, IAB-Doku) ((en))
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This paper deals with the evaluation of some public employment policies set up in France during the 1980's to improve the labour market prospects of unskilled young workers. The evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment. The econometric study is conducted with non-experimental longitudinal microdata recording individual labour market histories. A particular attention is paid to the differential effects of various types of measures, according to the educational level of recipients. Programmes involving a higher level of on-the-job training, such as alternating work/training programmes in private firms, are principally beneficial to the less educated young workers. In contrast, for more educated young workers, “work fare” programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs; for that subgroup, “work fare” programmes may act as a signal of low employment performance.
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The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
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Full-text available
The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
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This article analyses the design of optimal unemployment insurance in a search equilibrium framework where search effort among the unemployed is not perfectly observable. We examine to what extent the optimal policy involves monitoring of search effort and benefit sanctions if observed search is deemed insufficient. We find that introducing monitoring and sanctions represents a welfare improvement for reasonable estimates of monitoring costs; this conclusion holds both relative to a system featuring indefinite payments of benefits and a system with a time limit on unemployment benefit receipt.
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The decline in the youth unemployment rate in Denmark is nearly unique among OECD countries and merits study. In 1996, a radical labour market reform was implemented, the Youth Unemployment Programme (YUP), directed towards unemployed, low-educated youth. This paper analyses the effects of the implementation of the YUP. We investigate the duration of unemployment spells and the transition rates from unemployment to schooling and employment. Three effects are analysed: an announcement effect, a direct programme effect, and a sanction effect. We find that the YUP has been partially successful.
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We present new Monte Carlo evidence regarding the feasibility of separating causality from selection within non-experimental duration data, by means of the non-parametric maximum likelihood estimator (NPMLE). Key findings are: (i) the NPMLE is extremely reliable, and it accurately separates the causal effects of treatment and duration dependence from sorting effects, almost regardless of the true unobserved heterogeneity distribution; (ii) the NPMLE is normally distributed, and standard errors can be computed directly from the optimally selected model; and (iii) unjustified restrictions on the heterogeneity distribution, e.g., in terms of a pre-specified number of support points, may cause substantial bias.
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The purpose of this study is to determine whether training will increase the amount of time an individual spends in employment over an extended period. Training can influence this quantity through an effect on either the frequency or the duration of employment spells. Continuous time duration models provide a natural framework for modelling the influence of training on both the number and length of employment episodes. The estimation results obtained indicate that participation in a private training program improves the employment prospects of women by increasing both the frequency and duration of employment spells. The implications are less clear for men in that participation in private programs increases the length of both employment and nonemployment episodes. In the case of government programs participation in training leads to a decline in the amount of time spent employed by both women and men; however, this effect is based upon a small number of observations.
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This paper presents the results of an experimental study on unemployment benefit sanctions. The experimental set-up allows us to distinguish between the effect of benefit sanctions once they are imposed (the ex post effect) and the threat of getting a benefit sanction imposed (the ex ante effect). We find that both effects matter. Moreover, the ex ante effect turns out to be substantial and bigger than the ex post effect. Benefits sanctions stimulate the outflow from unemployment.
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This paper analyzes how a change in Slovenia's unemployment insurance law affected the quality of jobs workers found after periods of unemployment. Taking advantage the "natural experiment" we show through difference-in-differences estimation results that reducing the potential duration of unemployment benefits had no detectable effect on wages, on the probability of securing a permanent rather than a temporary job, or on the duration of the post-unemployment job. (c) 2007 Elsevier B.V. All rights reserved.
Article
Unemployment insurance systems include monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the effect of sanctions on the ensuing job quality, notably on wage rates and hours worked, and we examine how often a sanction leads to a lower occupational level. The data cover the Swedish population over 1999-2004. We estimate duration models dealing with selection on unobservables. We use weighted exogenous sampling maximum likelihood to deal with the fact the data register is large whereas observed punishments are rare. We also develop a theoretical job search model with monitoring of job offer rejection vis-a-vis monitoring of job search effort. The observation window includes a policy change in which the punishment severity was reduced. We find that the hourly wage and the number of hours are on average lower after a sanction, and that individuals move more often to a lower occupational level, incurring human capital losses. Monitoring offer rejections is less effective than monitoring search effort.
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Next, we examine models for multiple durations. In the applied econometric literature on the estimation of multiple-duration models, the range of different models is actually not very large. Typically, the models allow for dependence between the duration variables by way of their unobserved determinants, with each single duration following its own MPH model. In addition to this, the model may allow for an interesting “causal” effect of one duration on the other, as motivated by an underlying economic theory. For all these models we examine the conditions for identification. Some of these are intimately linked to particular estimation strategies. The multiple-duration model where the marginal duration distributions each satisfy an MPH specification, and the durations can only be dependent by way of their unobserved determinants, is called the Multivariate Mixed Proportional Hazard (MMPH) model. For this model, we address the issue of the dimensionality of the heterogeneity distribution and we compare the flexibility of different parametric heterogeneity distributions.
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I. Introduction Since the turn of the century, legislation in Western countries has expanded rapidly to reverse the brief dominance of laissez faire during the nineteenth century. The state no longer merely protects against violations of person and property through murder, rape, or burglary but also restricts "dis­ crimination" against certain minorities, collusive business arrangements, "jaywalking," travel, the materials used in construction, and thousands of other activities. The activities restricted not only are numerous but also range widely, affecting persons in very different pursuits and of diverse social backgrounds, education levels, ages, races, etc. Moreover, the likeli­ hood that an offender will be discovered and convicted and the nature and extent of punishments differ greatly from person to person and activity to activity. Yet, in spite of such diversity, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay. In the first place, obedience to law is not taken for granted, and public and private resources are generally spent in order both to prevent offenses and to apprehend offenders. In the second place, conviction is not generally considered sufficient punishment in itself; additional and sometimes severe punishments are meted out to those convicted. What determines the amount and type of resources and punishments used to enforce a piece of legislation? In particular, why does enforcement differ so greatly among different kinds of legislation?
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In the Netherlands, the average exit rate out of welfare is dramatically low. Most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency. If they do not, then a sanction in the form of a temporary benefit reduction can be imposed. This article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work.
Article
This paper investigates the effectiveness of unemployment benefit sanctions in reducing unem-ployment duration. Swiss data on benefit sanctions allow us to separate the effect of a warning that a person is not complying with eligibility requirements from the effect of the actual enforce-ment of a benefit sanction. Moreover, public employment services are given substantial leeway in setting the monitoring intensity. Results indicate that both warning and enforcement have a positive effect on the exit rate out of unemployment, and that increasing the monitoring intensity reduces the duration of unemployment of the nonsanctioned. (JEL: J64, J65, J68) Copyright (c) 2005 by the European Economic Association.
Article
"Unemployment insurance (UI) sanctions in the form of benefit reductions are intended to set disincentives for UI recipients to stay unemployed. Empirical evidence about the effects of UI sanctions in Germany is sparse. Using administrative data we investigate the effects of sanctions on the reemployment probability in West Germany for individuals who entered UI receipt between April 2000 and March 2001. By applying a matching approach that takes timing of events into account, we identify the ex post effect of UI sanctions. As a robustness check a difference-in-differences matching estimator is applied. The results indicate positive effects on the employment probability in regular employment for both women and men." (author's abstract, IAB-Doku) ((en))
Article
In the last two decades, U.S. policies have moved from the use of incentives to the use of sanctions to promote work effort in social programs. Surprisingly, except for anecdotes, there is very little systematic evidence of the extent to which sanctions applied to the abusive use of social entitlements result in greater work effort. In this paper we report the results of randomized trials designed to measure whether stricter enforcement and verification of work search behavior alone decreases unemployment (UI) claims and benefits. These experiments were designed to explicitly test claims based on non-experimental data failure of claimants to actively seek work. Our results provide no support for the view that the failure to actively seek work has been a cause of overpayment in the UI system.
Article
We model how unemployment benefit sanctions - benefit reductions that are imposed if unemployed do not comply with job search guidelines - affect unemployment. We find that benefit sanctions are more effective in reducing unemployment than an across-the-board reduction in the replacement rate, for a given loss in welfare for the unemployed. We decompose the effects of a sanction system into micro, crowding-out, spillover, and tax effects.
Article
This paper uses a natural experiment approach to identify the effects of an exogenouschange in future pension benefits on workers’ training participation. We use uniquematched survey and administrative data for male employees in the Dutch public sectorwho were born in 1949 or 1950. Only the latter were subject to a major pension reformthat diminished their pension rights. We find that this exogenous shock to pension rightspostpones expected retirement and increases participation in training courses amongolder employees, although exclusively for those employed in large organizations.
Article
This paper describes findings from a 1994 experimental evaluation of alternative work-search requirements in the Unemployment Insurance (UI) program. Requiring additional employer contacts or verification of contacts reduced UI receipt by one week and $115 per claimant. Because these additional requirements did not entail additional re-employment services, the UI spell reduction can be attributed to increased non-monetary costs for remaining on UI. A job-search workshop requirement reduced UI receipt by half a week and $75 per claimant, and additional results indicate that the effects were due to increased costs of continued UI receipt rather than to enhanced job-search productivity. These treatments did not affect employment or earnings, implying that reduced UI duration led to more intensive job search, rather than a reduction in the reservation wage. In contrast, elimination of the employer contact requirement increased UI receipt and post-UI earnings, suggesting that delayed exit from UI improved job matches. (Author's abstract.)
Article
Although rather discouraging in general, the evaluation literature indicates some measures that have been successful. Job-search assistance, wage subsidies in the private sector, and labour market training do work for some groups, even if the impacts are not large. Also, the evaluation literature focuses on the impacts of one-off programs. Regular interventions, such as job-search monitoring, intensive interviews, and referrals to vacant jobs, have rarely been evaluated rigorously. Recently, introduced "activation" strategies in some OECD countries do appear to yield significant employment gains for participants. An important element in such strategies is experiments with alternative ways of improving the performance of the public employment service. Activation policies which combine high-quality assistance to find work with pressure on unemployed people to accept job offers can be effective with respect to unemployment duration, but more rapid returns to work sometimes comes at the cost of accepting lower re-employment earnings. Although active policies might give rise to displacement effects in the short run, this need not be case the over the medium run of a few years. Declines in structural employment rates achieved by many OECD countries in the 1990s give some reasons for optimism in this respect.
Article
We construct a tractable, flexible-functional-form estimator of cumulative distribution functions for non-negative random variables which admits large numbers of covariates. The estimator adopts and extends techniques from the spell-duration literature for estimating hazard functions to distribution functions for wages, earnings, and income. We apply these methods to investigate sources of wage inequality for full-time male workers between Canada and the United States, finding that the Canadian wage density has a thinner left tail because low-educated workers have higher pay and a thinner right tail because of a lower proportion of highly-educated workers. Unions appear to play a large role in these outcomes.
Article
This paper analyzes the specification and identification of causal multivariate duration models. We focus on the case in which one duration concerns the point in time a treatment is initiated and we are interested in the effect of this treatment on some outcome duration. We define "no anticipation of treatment" and relate it to a common assumption in biostatistics. We show that (i) no anticipation and (ii) randomized treatment assignment can be imposed without restricting the observational data. We impose (i) but not (ii) and prove identification of models that impose some structure. We allow for dependent unobserved heterogeneity and we do not exploit exclusion restrictions on covariates. We provide results for both single-spell and multiple-spell data. The timing of events conveys useful information on the treatment effect. Copyright The Econometric Society 2003.
Article
The authors investigate the separate effects of a training program on the duration of participants' subsequent employment and unemployment spells. This program randomly assigned volunteers to treatment and control groups. However, the treatments and controls experiencing subsequent employment and unemployment spells are not generally comparable subsets of the initial groups. Standard practice in duration models ignores this issue, leading to a sample selection problem and misleading estimates of the training effects. The authors propose an estimator that addresses this problem and find that the program studied, the National Supported Work Demonstration, raised trainees' employment rates solely by lengthening their employment durations. Copyright 1996 by The Econometric Society.
Article
Conventional analyses of single spell duration models control for unobservables using a random effect estimator which the distribution of unobservables selected by ad hoc criteria. Both theoretical and empirical examples indicate that estimates of structural parameters obtained from conventional procedures are very sensitive to the choice of mixing distribution. Conventional procedures overparameterize duration models. We develop a consistent nonparametric maximum likelihood estimator for the distribution of unobservables and a computational strategy for implementing it. For a sample of unemployed workers our estimator produces estimates in concordance with standard search theory while conventional estimators do not.
Article
This article evaluates the effects of Swiss active labour market programmes on the job chances of unemployed workers. The main innovation is a comparison of two important dynamic evaluation estimators: the 'matching' estimator and the 'timing-of-events' estimator. We find that both estimators generate different treatment effects. According to the matching estimator temporary subsidised jobs shorten unemployment duration whereas training programmes and employment programmes do not. In contrast, the timing-of-events estimator suggests that none of the Swiss active labour market programmes shortens unemployment duration. Copyright 2008 The Author(s). Journal compilation Royal Economic Society 2008.
Article
Sanctions or punitive benefits reductions are increasingly used as a tool to enforce compliance of unemployment insurance claimants with search requirements. This article analyses sanctions using a unique administrative data set of individuals who started collecting unemployment insurance in the Netherlands in 1992. After correction for selectivity in the imposition of sanctions, we find that sanctions substantially raise individual re-employment rates. Copyright 2005 Royal Economic Society.
Article
This paper analyzes the effect of unemployment insurance sanctions on the transition rate from unemployment to employment. Sanctions are punitive benefits reductions that are supposed to make recipients comply with cer­tain minimum requirements concerning search behavior. We use a unique set of administrative micro data covering the whole population of individu­als who started collecting unemployment insurance in the Netherlands in 1992. To deal with the selectivity of the occurrence of a sanction we simul­taneously model the process by which unemployed get a sanction and the process by which they find jobs. We exploit the fact that some respondents experience multiple spells.
Article
We prove identification of dependent competing risks models in which each risk has a mixed proportional hazard specification with regressors, and the risks are dependent by way of the unobserved heterogeneity, or frailty, components. We show that the conditions for identification given by Heckman and Honoré can be relaxed. We extend the results to the case in which multiple spells are observed for each subject. Copyright 2003 Royal Statistical Society.
”Sanctions and Welfare Reform
  • Bloom
  • Don Dan
  • Winstead
Bloom, Dan and Don Winstead (2002). ”Sanctions and Welfare Reform.” Policy Brief No.12, January 2002, Brookings Institution, Washington DC
The Cost of Early Unemployment Duration
  • Bart Cockx
  • Matteo Picchio
Cockx, Bart and Matteo Picchio (2008). " The Cost of Early Unemployment Duration. ", mimeo, Université Catholique de Louvain.
The Battle against Exclusion: Social Assistance in Canada and Switzerland
OECD (1999). " The Battle against Exclusion: Social Assistance in Canada and Switzerland. " OECD, Paris.