18 March 2015

Sanctions help jobseekers into poor quality work?

Some of the papers the DWP and I have been reading suggest that (imposed) sanctions help people into jobs while others say the contrary. I've found more work based on Swiss data that says "Benefitt sanctions not only reduce unemployment durations but also reduce post-unemployment employment duration and earnings."

This is quite logical. For a start, the data is from 1998-2003 when the Swiss unemployment rate was around 1.5-4.5% (See http://www.tradingeconomics.com/switzerland/unemployment-rate) so there may have been "scroungers" refusing to take available jobs. However, sanctioning them has pushed them into lower quality jobs. This is understandable too - jobseekers will have taken just about any job to alleviate the crisis but the sanctions actually harmed longer term prospects.  In more detail:

"The clear persistence of negative sanction effects on earnings up to two years after unemployment exit may be explained by lock-in into the accepted job or by faster return to unemployment. Once the individual has accepted a lower-quality-job, it may be difficult for him/her to catch up with the non-sanctioned people by quickly changing to a better job. Moreover, individuals who accept a worse paid job are more likely to leave this job and return to unemployment. Both lines of reasoning explain why sanctions lead to a reduction in post unemployment earnings."

When you study the DWP literature, it is all about getting people into work as soon as possible. The idea that being a more selective jobseeker could be a better long-term approach doesn't seem to have occurred to them.

Related posts here and here and now here

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