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

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 fe...

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Bibliographic Details
Published inEconomica (London) Vol. 89; no. 353; pp. 1 - 28
Main Authors van den Berg, Gerard J., Uhlendorff, Arne, Wolff, Joachim
Format Journal Article
LanguageEnglish
Published London Blackwell Publishing Ltd 01.01.2022
Wiley
Subjects
Compliance
Dropping out
Economics and Finance
Humanities and Social Sciences
Labor force
Labor market
Quality of life
Rehabilitation
Sanctions
Wages & salaries
Welfare
Welfare recipients
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Summary: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.
ISSN:0013-0427
1468-0335
1468-0335
DOI:10.1111/ecca.12392