The Effect of Unemployment Insurance Sanctions on the Transition Rate from Unemployment to Employment

Sanctions or punitive benefits reductions are increasingly used as a tool to enforce compliance of unemployment insurance claimants with search requirements. This article analyses sanctions using a unique administrative data set of individuals who started collecting unemployment insurance in the Netherlands in 1992. After correction for selectivity in the imposition of sanctions, we find that sanctions substantially raise individual re-employment rates. Copyright 2005 Royal Economic Society.