Benefit Sanctions: Detailed Methodology

Pipinis, Dimitris and Taylor, Sarah and Tuffin, Andrew and Ross, Colin and Tse, Max (2016): Benefit Sanctions: Detailed Methodology. Published in:

Abstract

This paper, which accompanies the National Audit Office report on benefit sanctions in the UK, provides an evaluation of the labour market impact of benefit sanctions for Work Programme claimants, a large welfare-to-work programme targeting the long-term unemployed in the UK. We use rich administrative data from the Department for Work & Pensions which include information on the benefit and employment history of claimants. We exploit the random assignment of claimants to different Work Programme providers and the variation in sanction referrals, across providers, to estimate an instrumental variables model. The model allows us to identify the impact of sanctions on benefit receipt, likelihood of employment and earnings. We find that sanctions make jobs more likely for Jobseeker’s Allowance claimants but less likely for sick and disabled claimants of Employment and Support Allowance. In addition, our results on earnings suggest that Jobseeker’s Allowance claimants are often moving to jobs with shorter hours and/or lower wages. Our analysis provides the first UK evidence, using individual level data, on the impact of benefit sanctions on the labour market outcomes of sanctioned claimants and contributes to the very limited research on the impact of benefit sanctions on the labour market outcomes of claimants with disabilities.

• Item Type: MPRA Paper
• Language: English
• Keywords: benefit sanctions, instrumental variables, earnings effects, employment effects, disability
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J65 - Unemployment Insurance ; Severance Pay ; Plant Closings; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J68 - Public Policy

References

Abbring JH, Van den Berg GJ. and Van Ours JC.,(2005). The effect of unemployment insurance sanctions on the transition rate from unemployment to employment, Economic Journal, vol. 115, pp. 602–630.

Arni P, Lalive R. and Van Ours JC.,(2013).How effective are unemployment benefit sanctions? Looking beyond unemployment exit, Journal of Applied Econometrics, vol. 28, pp. 1153–78.

Boockmann B, Thomsen SL. and Walter T., (2014). Intensifying the use of benefit sanctions –an effective tool to shorten welfare receipt and speed up transitions to employment?, IZA Journal of Labor Policy 3:21

Fording RC, Schram SF. and Soss J.,(2013). Do welfare sanctions help or hurt the poor? estimating the causal effect of sanctioning on client earnings, Social Service Review, vol. 87, No. 4, pp. 641–676.

Hofmann B.,(2012). Short and long-term ex-post effects of unemployment insurance sanctions. Jahrbücher für Nationalökonomie und Statistik, 232(1), pp. 31–60.

Van der Klaauw B. and Van Ours JC.,(2013). Carrot and stick: How re-employment bonuses and benefit sanctions affect exit rates from welfare, Journal of Applied Econometrics, Vol. 28, pp. 275–96.

Lalive R. and Zweimüller J.,(2005). The effect of benefit sanctions on the duration of unemployment, Journal of the European Economic Association, vol. 3, No. 6, pp. 1386–1417.

Loopstra R, Reeves A, McKee M. and Stuckler D.,(2015). Do punitive approaches to unemployment benefit recipients increase welfare exit and employment? A cross-area analysis of UK sanctioning reforms, Sociology working paper 2015-01, Department of Sociology, University of Oxford.

Müller K-U. and Steiner V., (2008). Imposed benefit sanctions and the unemployment to employment transition: the German experience, Discussion papers, German Institute for Economic Research, No. 792.

Svarer M.,(2011). The effect of sanctions on exit from unemployment: evidence from Denmark, Economica, vol. 78, pp. 751–78.

Van den Berg GJ, Hofmann B. and Uhlendorff A.,(2016). The role of sickness in the evaluation of job search assistance and sanctions, DIW Berlin Discussion paper 1542, German Institute for Economic Research (DIW), Berlin.

Van den Berg GJ, Van der Klaauw B. and Van Ours JC.,(2004). Punitive sanctions and the transition rate from welfare to work, Journal of Labor Economics, vol 22, pp. 211–41.

Van den Berg GJ, and Vikstrom J.,(2009). Monitoring job offer decisions punishments exit to work and job quality, Working Paper, IFAU – Institute for Evaluation of Labour Market and Education Policy, No. 2009:18.

Van den Berg GJ, A Uhlendorff. and Wolff J.,(2013). Sanctions for young welfare recipients, Working Paper, IFAU – Institute for Evaluation of Labour Market and Education Policy, No. 2013:26.