Job Search Requirements Research Articles

Do Geographical Mobility Requirements for the Unemployed Affect their Exit Rate to Work? Evidence from a Policy Change

A policy change tightened job search requirements regarding geographical mobility for unemployment insurance–benefit recipients in Germany. Those affected by the policy change were individuals without family ties and whose reemployment prospects were low in their home labor market region. The author finds that after one year the policy change led to a 4.6 percentage point increase in employment among women without children who lived in regions with relatively high unemployment. Women responded to the policy change by taking up jobs in their home labor market region as well as outside of that region. The author does not find any effects of the tightened mobility requirements for men.

The Necessity of Self-Employment Towards Retirement: Evidence from Labor Market Dynamics and Search Requirements for Unemployment Benefits

This paper investigates whether individuals at the end of working life choose self-employment out of necessity and to what degree job search requirements for unemployment benefits induce people to become self-employed. For this purpose we analyze labor market transitions for people between the ages of 50 and 63 using a dynamic multinomial logit model with unobserved heterogeneity.The results indicate that at the end of the career individuals with a weak labor market position have a relatively high probability to become self-employed, e.g. to end or avoid a period of unemployment or inactivity (necessity driven self-employment). Contrasting some earlier work, the results do not suggest that self-employment is used as a gradual retirement route for employees. A difference-in-differences analysis shows that job search requirements among unemployed older workers increased the outflow from unemployment and decreased the inflow into unemployment, but did not increase self-employment out of necessity or opportunity.

The Effects of Binding and Non-Binding Job Search Requirements

Job search requirements constrain the effort choice of unemployment insurance recipients by enforcing a minimum number of monthly applications. This paper is the first to assess how individual search effort, job finding and job stability react to this constraint. Standard job search theory predicts that requirements affect each job seeker relative to her unconstrained effort choice. Therefore, the behavioral treatment intensity of interest is the incremental effort necessary to comply with the requirement. Using novel Swiss register data, we measure this intensity as the difference between the individual requirement threshold and the search effort provided just before requirement imposition. Our econometric approach exploits that – conditional on a broad set of choice fixed effects – the match between the job seeker's unconstrained effort choice and the caseworker's requirement setting behavior is arbitrary. Therefore, it provides exogenous variation in the treatment assignment. We find that binding search requirements that exceed the job seeker's unconstrained effort choice, increase job finding in a substantial way. These effects are highly heterogeneous with respect to the job seeker's characteristics. They come at the cost of increased non-compliance and sanction imposition rates. Moreover, binding requirements have striking negative effects on job stability. Finally, we find that non-binding requirements can also affect search outcomes. This suggests that requirements can operate as signals, thereby generating behavioral effects that are not predicted by standard job search theory.

Is it socially efficient to impose job search requirements on unemployed benefit claimants with hyperbolic preferences?

DellaVigna and Paserman (2005) and Paserman (2008) have shown that imposing job search requirements on sophisticated unemployed benefit claimants with hyperbolic time preferences is Pareto improving in that it raises welfare for the unemployed, by limiting harmful procrastination, and for employees, since the enhanced search boosts the job finding rate, thereby reducing the contributions required for the funding of benefits. This paper demonstrates that the range of Pareto improvements is much reduced if the analysis takes into account the fact that benefit claimants may not comply with the requirements, especially if the monitoring technology displays imperfections induced by caseworker discretion or measurement error.

Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality

AbstractUnemployment insurance systems include the monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the causal effect of sanctions on the ensuing job quality, notably on wages and occupational level. We use Swedish data and estimate duration models dealing with selection on unobservables. We also develop a theoretical job search model that monitors job offer rejection versus job search effort. The empirical results show that, after a sanction, the wage rate is lower and individuals move more often to a part‐time job and a lower occupational level, incurring human capital losses.

The impact of monitoring and sanctioning on unemployment exit and job-finding rates

Unemployment benefits often reduce incentives to search for a job. Policymakers have responded to this behaviour by setting minimum job search requirements, by monitoring to check that unemployment benefit recipients are engaged in the appropriate level of job search activity, and by imposing sanctions for infractions. Empirical studies consistently show that job search monitoring and benefit sanctions reduce unemployment duration and increase job entry in the short term. There is some evidence that longer-term effects of benefit sanctions may be negative.

Job search requirements for older workers: the effect on reservation wages

PurposeThe goal of the paper is to investigate how reservation wages of older unemployed welfare recipients change once they are no longer subject to standard job search requirements.Design/methodology/approachThe authors apply a regression discontinuity design.FindingsConsistent with theoretical predictions, the authors’ findings indicate that eliminating job search requirements will tend to increase reservation wages.Practical implicationsThe results correspond to previous findings in the literature that monitoring leads to lower accepted wages and increased exits rates from unemployment, and that it may be a successful policy measure to keep older workers in the labor market.Originality/valueMonitoring of job search effort has been shown to be an effective method of activating unemployed people, but little evidence has been found on the effect of activation measures on older workers.

Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis

This paper develops a partial equilibrium job search model to study the behavioral and welfare implications of an Unemployment Insurance (UI) scheme in which job search requirements are imposed on UI recipients with hyperbolic preferences. We show that, if the search requirements are well chosen, a perfect monitoring scheme can in principle increase the job finding rate and, contrary to what happens with exponential discounting, it can raise the expected lifetime utility of the current and future selves of sophisticated hyperbolic discounters. The same holds for naive agents if the welfare criterion ignores their misperception problem. In sum, introducing a perfect monitoring scheme can be a Pareto improvement. However, if claimants have the opportunity to withdraw from the UI scheme, their long-run utility can even be lower than in the absence of job search requirements. Imperfections in the measurement of job-search effort further reduce the chances that monitoring raises the welfare of the unemployed.

Job search requirements for older unemployed: Transitions to employment, early retirement and disability benefits

We use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment, early retirement and sickness/disability benefits. The reform, becoming effective on January 1 2004, requires the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits. Before the new law was passed, unemployed individuals were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, we find that for several groups of individuals who are affected by the policy change, the stricter search requirements significantly increases their entry rate into employment. However, we also find evidence of a higher outflow to sickness/disability insurance schemes, a presumably unwanted side-effect of the policy change.

Short- and Long-term Ex-Post Effects of Unemployment Insurance Sanctions

Summary Unemployment insurance (UI) benefit sanctions in form of benefit reductions are intended to set an incentive to comply with job search requirements and to decrease moral hazard behaviour. However, sanctions might also affect the subsequent employment history. Empirical research on long-term effects is scarce. Using administrative data, we investigate short- and long-term effects of sanctions on the reemployment probability of individuals in West Germany who entered UI benefit receipt between April 2000 and March 2001. As outcomes we consider regular employment, other employment, and having dropped out of the registered labour market. By applying a matching approach that takes the timing of treatment into account, we identify the ex post effect of UI sanctions. According to our results, sanctions are effective in increasing the probability of regular employment for young sanctioned UI benefit recipients. Older women on average respond to a sanction by taking up jobs of lower quality. For both women and men, we find an increased number of months out of the official work force after a sanction.

Economic preferences and attitudes of the unemployed

PurposeThe aim of this paper is to study the economic effects of risk attitudes, time preferences, trust and reciprocity and to compare natives and second generation migrants.Design/methodology/approachThis paper is based on the IZA Evaluation Dataset, a recently collected survey of a representative inflow sample into unemployment in Germany. The data include a large number of migrant‐specific variables as well as information about economic preferences and attitudes. This allows an assessment of whether and how unemployed second generation migrants differ from unemployed natives in terms of economic preferences and attitudes.FindingsDifferences are found between the two groups mainly in terms of risk attitudes and positive reciprocity. Second generation migrants have a significantly higher willingness to take risks and they are less likely to have a low amount of positive reciprocity when compared to natives. It was also found that these differences matter in terms of economic outcomes, and more specifically in terms of the employment probability about two months after unemployment entry.Research limitations/implicationsThe findings offer interesting perspectives, e.g. with regard to the design and targeting of active labor market policy. It may be reasonable to specifically focus on less risk averse individuals with measures such as job search requirements and monitoring.Originality/valueThis paper provides novel and direct evidence on the relationship between economic preferences, attitudes and labor market reintegration of natives and second generation migrants.

Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits

This discussion paper resulted in a publication in the 'European Economic Review' 2013, 58, 31-57. In this paper, we use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment, early retirement and sickness/disability benefits. The reform, becoming effective on January 1st 2004, required the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits. Before the new law was passed, unemployed were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, we find that for several groups of individuals that were affected by the policy change, the stricter search requirements did significantly increase their entry rate into employment. However, we also find evidence of a higher outflow to sickness/disability insurance schemes, a presumably unwanted side-effect of the policy change.

Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits

Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits

Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits

We use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment, early retirement and sickness/disability benefits. The reform, becoming effective on January 1st 2004, requires the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits. Before the new law was passed, unemployed individuals were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, we find that for several groups of individuals who are affected by the policy change, the stricter search requirements significantly increases their entry rate into employment. However, we also find evidence of a higher outflow to sickness/disability insurance schemes, a presumably unwanted side-effect of the policy change.

The long-term effects of job search requirements: Evidence from the UK JSA reform

This paper investigates long-term returns from unemployment compensation, exploiting variation from the UK JSA reform of 1996, which implied a major increase in job search requirements for eligibility and in the related administrative hurdle. Search theory predicts that such changes should raise the proportion of nonclaimant nonemployed, with consequences on search effort and labor market attachment, and lower the reservation wage of the unemployed, with negative effects on post-unemployment wages. I test these ideas on longitudinal data from social security records (LLMDB). Using a difference in differences approach, I find that individuals who start an unemployment spell soon after JSA introduction, as opposed to 6 months earlier, are 2.5–3% more likely to move from unemployment into Incapacity Benefits spells, and 4–5% less likely to have positive earnings in the following year. This latter employment effect only vanishes 4 years after the initial unemployment shock. Also, annual earnings for the treated individuals are lower than for the non-treated. These results suggest that while tighter search requirements were successful in moving individuals off unemployment benefits, they were not successful in moving them onto stable or better jobs, with fairly long-lasting unintended consequences on a number of labor market outcomes.

Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality

Unemployment insurance systems include monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the effect of sanctions on the ensuing job quality, notably on wage rates and hours worked, and we examine how often a sanction leads to a lower occupational level. The data cover the Swedish population over 1999-2004. We estimate duration models dealing with selection on unobservables. We use weighted exogenous sampling maximum likelihood to deal with the fact the data register is large whereas observed punishments are rare. We also develop a theoretical job search model with monitoring of job offer rejection vis-a-vis monitoring of job search effort. The observation window includes a policy change in which the punishment severity was reduced. We find that the hourly wage and the number of hours are on average lower after a sanction, and that individuals move more often to a lower occupational level, incurring human capital losses. Monitoring offer rejections is less effective than monitoring search effort.

Job search monitoring intensity, unemployment exit and job entry: Quasi-experimental evidence from the UK

Because unemployment benefit reforms tend to package together changes to job search requirements, monitoring and assistance, few existing studies have been able to empirically isolate the effects of job search monitoring intensity on the behaviour of unemployment benefit claimants. This paper exploits periods where monitoring has been temporarily withdrawn during a series of Benefit Office refurbishments — with the regime otherwise unchanged — to allow such identification. During these periods of zero monitoring the hazard rates for exits from claimant unemployment and for job entry both fall.

The Long-Term Effects of Job Search Requirements: Evidence from the UK JSA Reform

This paper investigates long-term returns from unemployment compensation, exploiting variation from the UK JSA reform of 1996, which implied a major increase in job search requirements for eligibility and in the related administrative hurdle. Search theory predicts that such changes should raise the proportion of non-claimant nonemployed, with consequences on search effort and labor market attachment, and lower the reservation wage of the unemployed, with negative effects on post-unemployment wages. I test these ideas on longitudinal data from Social Security records (LLMDB). Using a difference in differences approach, I find that individuals who start an unemployment spell soon after JSA introduction, as opposed to six months earlier, are 2.5-3% more likely to move from unemployment into Incapacity Benefits spells, and 4-5% less likely to have positive earnings in the following year. This latter employment effect only vanishes four years after the initial unemployment shock. Also, annual earnings for the treated individuals are lower than for the non-treated. These results suggest that while tighter search requirements were successful in moving individuals off unemployment benefits, they were not successful in moving them onto long-lasting or better jobs, with fairly long lasting unintended consequences on a number of labor market outcomes.

Economic Self-Sufficiency and Implementation of TANF in the District of Columbia

Even as federal policymakers debate the reauthorization of Temporary Assistance for Needy Families (TANF) legislation, state-level activists are beginning to discuss the best ways to implement the policy in their locales. The District of Columbia has experienced the lowest reduction in percentage of welfare caseloads in the country since the 1996 welfare reauthorization. This study explores implementation of welfare policy that both facilitates and hinders the ability of DC welfare clients to become self-sufficient. The study features in-depth interviews with twenty-six welfare clients in the District to add individual voices to the quantitative data gathered on the topic. Specifically, this paper explores the context of welfare clients' lives before and once on welfare, and asks which welfare policies they perceive to be obstacles to their own self-sufficiency. A limited ability to save money, few childcare options, strict transportation and job search requirements, and poor relationships with caseworkers all hinder a client's ability to support herself without assistance from TANF. A qualitative analysis will show that welfare recipients want and are ready to be self sufficient and have clear ideas of the current barriers embedded within the welfare systems that make their personal escape from poverty more difficult.

MUTUAL OBLIGATION AND THE JOB NETWORK: THE EFFECT OF COMPETITION ON THE ROLE OF NON‐PROFIT EMPLOYMENT SERVICES

Introduction The six years of Coalition government in Australia have seen a significant shift in the conditions under which unemployed people receive income support. The broad direction of change was set under Labor, with the adoption of the OECD `active society' approach. But since 1996 intensification of the requirements for job search and activity testing, the introduction of `Mutual Obligation' and Work for the Dole, and a massive increase in the level of breaching for non-compliance with these requirements have together produced an environment for job seekers that is qualitatively different from that of a decade ago. Alongside these changes has been the radical reorganisation of the delivery of employment services. From May 1998, the public employment service, which had existed since 1946, was effectively abolished and replaced with a national network of provider agencies competing in a quasi-marketplace (the Job Network). In the second round of Job Network contracts, from March 2000, the corporatised public employment agency, Employment National, lost most of its market share. This meant that the responsibility for reporting non-compliance with job search requirements lies mainly with organisations outside the public sector--many of which are non-profit agencies with a social service background. The creation of the Job Network represented a significant challenge for non-profit, community-based agencies. They had been accustomed to working in partnership with government on a grant-for-services basis, and had begun to adapt to the limited competitive framework of contracted case management under Working Nation. Now, however, they were faced with full-scale competition both with private sector and corporatised public agencies, and with each other. Although many welcomed the additional flexibility that came with outcome-based funding, there was considerable disquiet about the implications of full-scale contestability. There was also resistance to taking on responsibility for policing the activity test, which community-based agencies in particular saw as inimical to their traditional advocacy role. An initial study of a sample of private and non-profit agencies in the early months of the Job Network found some convergence emerging between the sectors (Lyons and Chan, 1999). Non-profits were adjusting to operating in a commercial environment--with some embracing competition wholeheartedly--while some private firms were displaying the kind of social concern about clients and their needs generally associated with the community sector. In a small study of non-profit agencies in Victoria, Laragy (1999) also found that staff had a number of concerns associated with moving from a partnership with government model to a competitive framework. These included the ethical dilemma of becoming more responsible for the policing of clients job search activities and an anxiety that agencies were losing their capacity for advocacy. More recently, Considine (2001) too found evidence of convergence between non-profits and for-profits in a range of activities and approaches--a development he ascribed mainly to agencies' dependence on a pricing structure determined by the purchasing department. These observations raise questions about the nature and role of non-profit providers in a competitive market framework. What does it mean, in terms of service to clients, that an agency is `not-for-profit'? Can the advocacy role that has long been an important raison d'etre for the community sector survive the incorporation into large-scale service delivery for government? As other papers at the Academy Workshop have shown, `mutual obligation' is a slippery concept, as `thick' or `thin', shallow or meaningful as any user wishes it to be. But if it is to have any useful meaning beyond being a subset of activity testing it has to include an obligation on the part of government to provide effective assistance for people involuntarily unemployed and seeking work. …