This Paper presents the results of an experimental study on unemployment benefit sanctions. The experimental set … that discourage the unemployed from risking benefit sanctions (the ex ante effect). We find that both effects matter … outflow from unemployment. …

This Paper analyses the design of optimal unemployment insurance in a search equilibrium framework where search effort … among the unemployed is not perfectly observable. We examine to what extent the optimal policy involves monitoring of search … featuring indefinite payments of benefits and a system with a time limit on unemployment benefit receipt. The optimal sanction …