“The Consequences of Job Search Monitoring for the Long-Term Unemployed: Disability instead of Employment?”, Octave De Brouwer, Elisabeth Leduc, Ilan Tojerow2023-08 (economics, sociology; backlinks)⁠:

• We study the effect of job-search monitoring (JSM) on individual labor market outcomes of the long-term unemployed.

• JSM increases exits from unemployment to disability insurance (DI) without affecting transitions into employment or other social welfare programs.

• The effect of JSM on DI materializes before any sanction can be imposed.

• Monitored individuals are still 10 pp more likely to be on DI 3 years after the start of monitoring.

• Exploring fiscal implications reveals that the decrease in UI transfers as a result of JSM are almost entirely offset by the increase in DI transfers.

We study the effect of job search monitoring (JSM) on individual labor market outcomes of the long-term unemployed. Exploiting the implementation of a JSM program targeted at jobseekers under the age of 49, we set up a regression discontinuity design that credibly identifies the program’s causal effect on unemployment, employment, and disability insurance (DI) participation and participation in other social welfare programs within a 3-year period. We find that JSM increases exits from unemployment to DI without affecting transitions into employment or other social welfare programs. We further find that the effect of JSM on DI materializes before any sanction can be imposed and monitored individuals are still 10 percentage points more likely to be on DI 3 years after the start of monitoring. Ultimately, exploring fiscal implications reveals that the decrease in unemployment transfers as a result of JSM is entirely offset by the increase in DI transfers.

[Keywords: disability, unemployment, job search monitoring, active labor market programs]l

…For the LT unemployed, the “spillover effects” of JSM on other social safety net programs thus appear to be restricted to DI, reinforcing previous findings that DI is a close substitute to UI (Borghans et al 2014, Andersen et al 2019).

…We provide further insights into the underlying mechanisms that are driving our findings. First, in a dynamic analysis, we document that the exits from UI to DI persist for up to 3 years after the monitoring procedure starts. These effects become evident before any sanctions can be imposed for non-compliance with job search requirements, suggesting that the mere threat of a sanction is enough to encourage individuals to transition to DI. Second, we provide more insights into the effects on DI. We show that JSM increases transitions to both short-term (ST) and LT DI, suggesting that health impairments are sufficiently serious to warrant entry into the LT DI program. These increases are driven by musculoskeletal and psychological disorders. In addition, individuals on the left and right of the cutoff exhibit similar exclusion rates from DI, indicating that those who transition to DI as a result of JSM are not in better health than other DI recipients. Third, in our analysis of fiscal implications, we show that the decrease in UI transfers as a result of JSM is almost entirely offset by the increase in DI transfers.

…2.1. The JSM program: In comparison with other JSM programs that were implemented in European countries, the Belgian program we study has some features that can be summarized along 3 dimensions: (1) lengthy intervals between interviews, (2) severe sanctions following negative evaluations, and (3) high discretionary power for caseworkers overseeing the evaluations. The first feature allows us to exploit the Belgian context to study the effects of JSM on the LT unemployed.

Backlinks: