DP3311 The Effect of Benefit Sanctions on the Duration of Unemployment

Author(s): Rafael Lalive, Jan C. van Ours, Josef Zweim├╝ller
Publication Date: April 2002
Keyword(s): benefit sanctions, monitoring, unemployment duration
JEL(s): J64, J65, J68
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3311

This Paper investigates the effectiveness of benefit sanctions in reducing unemployment duration. Data from the Swiss labour market allow making a distinction between the effect of a warning that a person is not complying with eligibility requirements and the effect of the actual enforcement of a benefit sanction. We find that both warning and enforcement have a positive effect on the exit rate out of unemployment. Moreover, the stricter the sanction policy the shorter the duration of unemployment. This can be taken as evidence of a strong ex-ante effect of a strict sanction policy.