The Effect of Varying Sanction Values on Future Compliance with Unemployment Benefit Requirements: An Empirical Analysis Using Australian Administrative Data

Abstract

<p>Few studies have examined the effect of varying unemployment benefit sanctions before application on jobseekers' behaviour. However, theory suggests this is the primary way sanctions operate. We examine the effect of increasing sanction values on future non-compliance using administrative data from the introduction of an Australian scheme with increasing sanctions for repeated non-compliance. Jobseekers with equivalent non-compliance histories have decreased hazards of non-compliance when the consequences are higher, even with small variation in sanction values. This suggests policies altering sanction values can effectively encourage compliance with benefit requirements, at least at the level imposed in Australia (low by international standards).</p>