The Effect of Sanctions on Exit from Unemployment: Evidence from Denmark

Abstract

This paper investigates the effect of sanctions of unemployment insurance benefits on the exit rate from unemployment for a sample of Danish unemployed. The findings are that even moderate sanctions have rather large effects. For both males and females, the exit rate increases by more than 100% following an imposition of a sanction. The paper exploits a rather large sample to elaborate on the basic findings. It is shown that the effect of sanctions wears out after around three months and that some groups of unemployed are more responsive to sanctions than others.