Examining the Effects of Zero‐Dollar Unemployment Payment Sanctions*

Abstract

Existing evidence has demonstrated that sanctions affect unemployment payment recipients’ behaviour. However, in addition to financial impacts, sanction application includes administrative processes. This study examines a feature of Australian unemployment benefits, whereby jobseekers not meeting requirements may face a zero‐dollar sanction (termed suspension). The results indicate a strong behavioural response, with previously suspended jobseekers 13.1 percentage points more likely to attend their next appointment. Further, ongoing behavioural change was observed, even for jobseekers with a history of previous non‐compliance. This suggests temporary payment suspension and associated administrative processes are effective at securing behavioural change, without the need for lasting financial impact.