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Job Seeker’s Allowance (JSA) benefit sanctions and labour market outcomes in Britain, 2001–2014

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  • Martin Taulbut
  • Daniel F Mackay
  • Gerry McCartney

Abstract

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.

Suggested Citation

  • Martin Taulbut & Daniel F Mackay & Gerry McCartney, 2018. "Job Seeker’s Allowance (JSA) benefit sanctions and labour market outcomes in Britain, 2001–2014," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1417-1434.
    • Handle: RePEc:oup:cambje:v:42:y:2018:i:5:p:1417-1434.
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    References listed on IDEAS

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    1. repec:aei:rpaper:25670 is not listed on IDEAS
    2. Jennifer C. Smith, 2011. "The Ins and Outs of UK Unemployment," Economic Journal, Royal Economic Society, vol. 121(552), pages 402-444, May.
    3. Reeves, Aaron, 2017. "Does sanctioning disabled claimants of unemployment insurance increase labour market inactivity? An analysis of 346 British local authorities between 2009 and 2014," SocArXiv ztgdq, Center for Open Science.
    4. Danielle Venn, 2012. "Eligibility Criteria for Unemployment Benefits: Quantitative Indicators for OECD and EU Countries," OECD Social, Employment and Migration Working Papers 131, OECD Publishing.
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    Cited by:

    1. Sung‐Eun Cho & Young‐Min Lee, 2020. "The Effects of Youth Job Seeker Allowance in South Korea," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 34(2), pages 64-77, November.

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