Effects of Welfare Sanctions in Couple Households

with Gerard J. van den Berg, Arne Uhlendorff and Joachim Wolff

Abstract: Means-tested welfare benefits are usually provided at the household level. Job search effort of unemployed welfare benefit recipients is monitored, and non-compliance with job search requirements can lead to a sanction and therewith a temporary drop in household income. Among unemployed couples on welfare, a sanction is typically induced by one of the partners but potentially the burden is shared by both. We consider effects of sanctions on their transition rates into work. We examine theoretical implications and provide empirical evidence based on administrative data from Germany. We find that sanctions increase the probability of entering employment for the sanctioned welfare recipient but also for their partner. Females react more strongly to a sanction of their partner than males

Training the Caseworker: Does it Improve Employment Outcomes of Unemployed Welfare Recipients?

with Stefan Tübbicke

Abstract: Caseworkers play an important role in shaping jobseekers’ employment outcomes through counseling and monitoring. We study the introduction of a unified counseling framework in Germany that affected about 1.2 million unemployed welfare recipients. Its core element was a training program for caseworkers designed to raise counseling quality. Using administrative data and a differences-in-differences design, we estimate that the reform increased days in regular employment by about 6 % over five years. Effects are driven by increases in skilled rather than unskilled employment, and are concentrated in high-unemployment districts. We conclude that training raised caseworkers’ productivity and thus jobseekers’ employment prospects. 

Regime Effects of Active Labour Market Policy Measures for Welfare Recipients

single-authored

Abstract: Public employment services and caseworkers vary in how intensively they rely on different active labour market policy (ALMP) measures. This creates distinct ALMP regimes that may affect jobseekers' search behaviour even in absence of treatment. Based on administrative data for German welfare recipients, I estimate regime effects of benefit sanctions, workfare measures (public sector employment), and activation measures (classroom training and job placement). The estimation relies on caseworker-team variation in ALMP applications and leverages the conditional quasi-random assignment of welfare recipients to caseworker teams for identification. Results show that a rise in the sanction or activation regime intensity increases exits to employment, whereas a rise in the workfare regime intensity decreases them. While increasing the activation regime intensity raises five-year average earnings, increasing the sanction or workfare regime intensity lowers them. These results suggest that policymakers can shape welfare recipients' employment prospects by steering the relative emphasis that a PES or a caseworker (team) places on different ALMPs.