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Intensifying the Use of Benefit Sanctions – An Effective Tool to Shorten Welfare Receipt and Speed up Transitions to Employment?

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Abstract

Benefitt sanctions imposed on non-compliant welfare recipients are a new element in the German welfare system. In practice, the sanction policy and the application of sanctions vary considerably across the 439 welfare agencies. Based on combined administrative and survey data, these differences are used as instrumental variables to estimate the effect of sanctions on the drop-out from welfare and the transition to employment. The estimated local average treatment effect (LATE) is an estimate of the effectiveness of an intensifed use of sanctions. The results show that tightening sanction policy would be quite e ective.

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  • Bernhard Boockmann & Stephan Thomsen & Thomas Walter, 2009. "Intensifying the Use of Benefit Sanctions – An Effective Tool to Shorten Welfare Receipt and Speed up Transitions to Employment?," IAW Discussion Papers 56, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:56
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    1. van der Klaauw, B. & van Ours, J.C., 2010. "Carrot and Stick : How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates," Other publications TiSEM f368f876-0bd7-499d-8211-d, Tilburg University, School of Economics and Management.
    2. Sebastien Menard, 2019. "The impact of benefit sanctions on equilibrium wage dispersion and job vacancies," TEPP Working Paper 2019-08, TEPP.
    3. Alessio Brown & Johannes Koettl, 2015. "Active labor market programs - employment gain or fiscal drain?," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-36, December.
    4. Boockmann, Bernhard & Osiander, Christopher & Stops, Michael & Verbeek, Hans, 2013. "Effekte von Vermittlerhandeln und Vermittlerstrategien im SGB II und SGB III (Pilotstudie) : Abschlussbericht an das IAB durch das Institut für Angewandte Wirtschaftsforschung e. V. (IAW), Tübingen," IAB-Forschungsbericht 201307, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Ademmer, Martin & Boysen-Hogrefe, Jens & Fiedler, Salomon & Groll, Dominik & Jannsen, Nils & Kooths, Stefan & Mösle, Saskia & Potjagailo, Galina, 2018. "Deutsche Konjunktur im Winter 2018 - Aufschwung stösst an Grenzen: Belebung nur temporär [German Economy Winter 2018 - Upswing stretched to its limits: Acceleration only temporary]," Kieler Konjunkturberichte 50, Kiel Institute for the World Economy (IfW Kiel).
    6. Busk, Henna, 2016. "Sanctions and the exit from unemployment in two different benefit schemes," Labour Economics, Elsevier, vol. 42(C), pages 159-176.
    7. Max Deter, 2021. "Hartz and Minds: Happiness Effects of Reforming an Employment Agency," Journal of Happiness Studies, Springer, vol. 22(4), pages 1819-1838, April.
    8. Jan Hagemejer & Joanna Tyrowicz, 2020. "A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 35-52.
    9. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    10. Rainer Eppel & Helmut Mahringer & Andrea Weber, 2014. "Job Search Behaviour and Job Search Success of the Unemployed," WIFO Working Papers 471, WIFO.
    11. Jan Hagemejer & Joanna Tyrowicz & Jan Svejnar, 2014. "Measuring the Causal Effect of Privatization on Firm Performance," Working Papers 2014-14, Faculty of Economic Sciences, University of Warsaw.
    12. Gerards, Ruud & Welters, Ricardo, 2016. "Impact of financial pressure on unemployed job search, job find success and job quality," ROA Research Memorandum 008, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    13. Maximilian Joseph Blömer & Sebastian Link & Andreas Peichl & Marc Stöckli, 2021. "The Effects of the Means-tested Basic Income Support on the Behavior of Households - an Overview," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 120.
    14. Koning, Pierre, 2013. "Making Work Pay for the Indebted: The Effect of Debt Services on the Exit Rates of Unemployed Individuals," IZA Discussion Papers 7873, Institute of Labor Economics (IZA).
    15. Sebastien Menard & Solenne Tanguy, 2017. "Revisiting Hopenhayn and Nicolini 's optimal unemployment insurance with job search monitoring and sanctions," TEPP Working Paper 2017-08, TEPP.
    16. Pipinis, Dimitris & Taylor, Sarah & Tuffin, Andrew & Ross, Colin & Tse, Max, 2016. "Benefit Sanctions: Detailed Methodology," MPRA Paper 80012, University Library of Munich, Germany.
    17. Schneider, Hilmar & Uhlendorff, Arne & Zimmermann, Klaus F., 2010. "Mit Workfare aus der Sozialhilfe? Lehren aus einem Modellprojekt," IZA Standpunkte 33, Institute of Labor Economics (IZA).
    18. Bernhard Boockmann & Christopher Osiander & Michael Stops, 2014. "Vermittlerstrategien und Arbeitsmarkterfolg – Evidenz aus kombinierten Prozess- und Befragungsdaten [Caseworkers’ strategies and clients’ labor market outcomes]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 47(4), pages 341-360, December.
    19. Koning, Pierre, 2015. "Making work pay for the indebted? Assessing the effects of debt services on welfare recipients," Labour Economics, Elsevier, vol. 34(C), pages 152-161.

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    More about this item

    Keywords

    benefit sanctions; welfare recipients; IV; LATE;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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