Monitoring and Sanctions in a Non-Stationary Structural Job-Search Model

We develop and estimate a structural non-stationary econometric model of job search with monitoring of search effort and sanctions. The earliest moment of the first monitoring is announced several months in advance and the judgement of the caseworker is based on cumulated search effort over a reference period. A negative evaluation at the first meeting with a caseworker leads to the signature of an action plan and later meetings with possible sanctions if the UI recipient does not comply with the action plan. Forward-looking UI recipients anticipate the threat of monitoring and sanction. We disentangle the effect of the threat of being monitored, the impact of the monitoring itself and the ex-post effect of a sanction.