Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/166028
Authors: 
van den Berg, Gerard J.
Hofmann, Barbara
Uhlendorff, Arne
Year of Publication: 
2017
Series/Report no.: 
Working Paper, IFAU - Institute for Evaluation of Labour Market and Education Policy 2017:1
Abstract: 
Unemployment insurance agencies may combat moral hazard by punishing refusals to apply to assigned vacancies. However, the possibility to report sick creates an additional moral hazard, since during sickness spells, minimum requirements on search behavior do not apply. This reduces the ex ante threat of sanctions. Based on a large inflow sample into unemployment of male job seekers in West Germany in the year 2000, we analyze the effects of vacancy referrals and sanctions on the unemployment duration and the quality of job matches, in conjunction with the possibility to report sick. We estimate multispell duration models with selection on unobserved characteristics. We find that a vacancy referral increases the transition rate into work and that such accepted jobs go along with lower wages. We also find a positive effect of a vacancy referral on the probability of reporting sick. This effect is smaller at high durations, which suggests that the relative attractiveness of vacancy referrals increases over the time spent in unemployment. In our setting, with relatively severe sanctions, around 9 percent of sickness absence during unemployment is induced by vacancy referrals.
Subjects: 
unemployment
vacancy referrals
physician
wage
unemployment insurance
monitoring
moral hazard
JEL: 
J64
J65
C41
C21
Document Type: 
Working Paper

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