The Impact of Sanctions for Young Welfare Recipients on Transitions to Work and Wages, and on Dropping Out

Gerard J. van den Berg, Arne Uhlendorff, Joachim Wolff*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

The reintegration of young welfare recipients into the labour market is a major policy objective in many European countries. In this context, monitoring and sanctions are commonly used policy tools. We analyse the impact of strict sanctions for young welfare recipients whose institutional setting features sanctions for non-compliance with job-search requirements that effectively cancel benefits for a period of 3 months after detection. We consider effects on job-search outcomes and on dropping out of the labour force, using administrative data on a large inflow sample. We estimate multivariate duration models taking selection on unobservables into account. Our results indicate an increased job entry rate at the expense of an increased withdrawal from the labour force and lower entry wages. Combining quantitative with qualitative evidence reveals that the latter side-effects of sanctions can have dramatic consequences for the quality of life of the youths involved.

Original languageEnglish
JournalEconomica
DOIs
Publication statusAccepted/In press - 2021

Bibliographical note

Funding Information:
Arne Uhlendorff is grateful to Investissements d’Avenir (ANR‐11‐IDEX‐0003/Labex Ecodec/ANR‐11‐LABX‐0047) for financial support. Open Access funding enabled and organized by Projekt DEAL.

Publisher Copyright:
© 2021 The Authors. Economica published by John Wiley & Sons Ltd on behalf of London School of Economics and Political Science

Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.

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