HWWI Research Paper

Impact of Benefit Sanctions on Unemployment Outflow – Evidence from German Survey Data

Similar to many other European countries, Germany's unemployment policy made a paradigm shift towards activation policy with a tightened monitoring and sanction regime. In our analysis, we examine the impact of benefit sanctions on the probability of getting employed or leaving the labor force. Using a mixed proportional hazard model, we draw causal inference of sanction enforcement on unemployment exit hazards. Based on a survey sample, covering the first three years after implementation of the "Hartz IV" law in 2005, we find evidence for a positive impact of sanctions on getting employed, but also on leaving the labor market.