Examining the Effects of Zero‐Dollar Unemployment Payment Sanctions

Abstract

Existing evidence has demonstrated that sanctions affect unemployment payment recipients' behaviour. However, in addition to financial impacts, sanction application includes administrative processes. This study examines a feature of Australian unemployment benefits, whereby jobseekers not meeting requirements may face a zero‐dollar sanction (termed suspension). The results indicate a strong behavioural response, with previously suspended jobseekers 13.1 percentage points more likely to attend their next appointment. Further, ongoing behavioural change was observed, even for jobseekers with a history of previous non‐compliance. This suggests temporary payment suspension and associated administrative processes are effective at securing behavioural change, without the need for lasting financial impact.