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Impact of welfare sanctions on employment entry and exit from labor force: Evidence from German survey data

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  • Hillmann, Katja
  • Hohenleitner, Ingrid

Abstract

Similar to numerous other European countries, Germany's unemployment policy went through a paradigm shift in 2005, towards activation policy by tightening their monitoring and sanction regime. With our study, we aim to provide causal evidence for whether an intended positive effect of benefit sanctions on employment entry of welfare recipients has been bought at the expense of an unintended enhanced incentive to leave the labor market. Using a mixed proportional hazard model, we draw causal inference of sanction enforcements on unemployment exit hazards. Based on a novel survey sample covering the first three years after the 'Hartz IV' law came into effect, we provide evidence for a positive impact of sanctions on employment as well as on exit from labor force.

Suggested Citation

  • Hillmann, Katja & Hohenleitner, Ingrid, 2015. "Impact of welfare sanctions on employment entry and exit from labor force: Evidence from German survey data," HWWI Research Papers 168, Hamburg Institute of International Economics (HWWI).
    • Handle: RePEc:zbw:hwwirp:168
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    References listed on IDEAS

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    1. Cockx, Bart & Dejemeppe, Muriel & Launov, Andrey & Van der Linden, Bruno, 2011. "Monitoring, Sanctions and Front-Loading of Job Search in a Non-Stationary Model," IZA Discussion Papers 6181, Institute of Labor Economics (IZA).
    2. Jaap H. Abbring & Gerard J. Berg & Jan C. Ours, 2005. "The Effect of Unemployment Insurance Sanctions on the Transition Rate from Unemployment to Employment," Economic Journal, Royal Economic Society, vol. 115(505), pages 602-630, July.
    3. Patrick Arni & Rafael Lalive & Jan C. Van Ours, 2013. "How Effective Are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1153-1178, November.
    4. Ames, Anne, 2009. "Ursachen und Auswirkungen von Sanktionen nach § 31 SGB II," Study / edition der Hans-Böckler-Stiftung, Hans-Böckler-Stiftung, Düsseldorf, volume 127, number 242.
    5. Jaap H. Abbring & Gerard J. Van Den Berg, 2003. "The identifiability of the mixed proportional hazards competing risks model," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 65(3), pages 701-710, August.
    6. Bernhard Boockmann & Stephan L. Thomsen & Thomas Walter, 2014. "Intensifying the use of benefit sanctions: an effective tool to increase employment?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-19, December.
    7. Eduardo A. Haddad & Jaime Bonet & Geoffrey J. D. Hewings, 2023. "Introduction and Overview," Advances in Spatial Science, in: Eduardo A. Haddad & Jaime Bonet & Geoffrey J. D. Hewings (ed.), The Colombian Economy and Its Regional Structural Challenges, chapter 0, pages 1-16, Springer.
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    Cited by:

    1. Hohenleitner, Ingrid & Hillmann, Katja, 2019. "Impact of welfare sanctions on employment and benefit receipt: Considering top-up benefits and indirect sanctions," HWWI Research Papers 189, Hamburg Institute of International Economics (HWWI).
    2. Laporšek Suzana & Vodopivec Milan & Vodopivec Matija, 2022. "Activation programs for unemployment benefit recipients in Slovenia," Review of Economic Perspectives, Sciendo, vol. 22(2), pages 75-95, June.
    3. Lukas Fervers, 2016. "Fast track to the labour market or highway to hell? The effect of activation policies on quantity and quality of labour market integration," IAW Discussion Papers 125, Institut für Angewandte Wirtschaftsforschung (IAW).
    4. Hohenleitner, Ingrid & Hillmann, Katja, 2019. "Impact of welfare sanctions on the quality of subsequent employment: Wages, incomes, and employment stability," HWWI Research Papers 190, Hamburg Institute of International Economics (HWWI).

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    More about this item

    Keywords

    unemployment benefit sanctions; unemployed welfare recipients; unemployment duration; transition into employment; transition into non-employment; exit from labor force; mixed proportional hazard estimation;
    All these keywords.

    JEL classification:

    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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