The Effect of Benefit Sanctions on the Duration of Unemployment

This paper investigates the effectiveness of unemployment benefit sanctions in reducing unem-ployment duration. Swiss data on benefit sanctions allow us to separate the effect of a warning that a person is not complying with eligibility requirements from the effect of the actual enforce-ment of a benefit sanction. Moreover, public employment services are given substantial leeway in setting the monitoring intensity. Results indicate that both warning and enforcement have a positive effect on the exit rate out of unemployment, and that increasing the monitoring intensity reduces the duration of unemployment of the nonsanctioned. (JEL: J64, J65, J68) Copyright (c) 2005 by the European Economic Association.

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