DP2447 Punitive Sanctions and the Transition Rate From Welfare to Work

Author(s): Gerard van den Berg, Bas van der Klaauw, Jan C. van Ours
Publication Date: May 2000
Keyword(s): Punishment, Search Effort, Unemployment Duration, Welfare Agency
JEL(s): C41, J64, J68
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2447

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 paper investigates the effect of such sanctions on the transition from welfare to work using a unique set of rich administrative data on welfare recipients in The Netherlands. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work. We also describe the other determinants of the transition from welfare to work.