The Employment Effects of an Intensified Use of Benefit Sanctions

Abstract

Regardless of centralization or decentralization and of internal organization, the strategical elements used by welfare agencies might make a difference for the success of labor market activation for welfare recipients. One such element might be the sanction strategy of welfare agencies, i.e. the way welfare agencies deal with benefit revocations in case of non-compliance by welfare recipients.

This chapter builds on joint work with Bernhard Boockmann and Stephan Thomsen. It is a revised and extended version of Boockmann et al. (2009). Extensions include analyses for several subgroups of welfare recipients (individuals registered at centralized and decentralized welfare agencies, men and women, immigrants and native Germans). But while Boockmann et al. (2009) estimate the effects of sanctions on the drop-out from welfare (irrespective of employment uptake) and on the transition to employment (irrespective of drop-out from welfare), I consider selfsufficient employment.