Evaluating Vacancy Referrals and the Roles of Sanctions and Sickness Absence*

Abstract

Abstract Job vacancy referrals are a common active labor market policy measure. Unemployment insurance agencies may combat moral hazard by punishing refusals to apply to assigned vacancies. During sickness spells, minimum requirements on search behaviour do not apply. This may reduce the threat effect of sanctions. We study effects of vacancy referrals and sanctions on unemployment durations and job match quality. We find that a vacancy referral increases the transition rate into work. We also find a positive effect of a vacancy referral on the probability of reporting sick.