The effect of unemployment insurance sanctions on the transition rate from unemployment to employment

This paper analyzes the effect of unemployment insurance sanctions on the transition rate from unemployment to employment. Sanctions are punitive benefits reductions that are supposed to make recipients comply with cer­tain minimum requirements concerning search behavior. We use a unique set of administrative micro data covering the whole population of individu­als who started collecting unemployment insurance in the Netherlands in 1992. To deal with the selectivity of the occurrence of a sanction we simul­taneously model the process by which unemployed get a sanction and the process by which they find jobs. We exploit the fact that some respondents experience multiple spells.