Voluntary Quit Benefit Sanctioning
Unemployment insurance regimes risk moral hazard if workers can voluntarily leave employment or education while immediately receiving full state financial support.
Picture this
A mandatory sanction period acts like a waiting penalty at an amusement park ride. If you step out of the line voluntarily, you must wait five weeks before you can get back on the benefit payout track, discouraging workers from quitting jobs without having another one lined up.
What the evidence says
Job seekers voluntarily leaving employment or education face a strict 5-week sanction period during which no UI transfers are disbursed, defining eligibility parameters for unemployment duration tracking.
- Who
- N = 4,513 unemployed UI recipients (human, Denmark: Storstrøm and Southern Jutland counties).
- How
- Sample selection screening within an RCT duration study accounting for initial 5-week benefit disqualification periods.
What to do
Enforce a temporary benefit sanction window for voluntary job quitters to maintain job retention incentives and prevent moral hazard in benefit administration.
From the source
"The reason for choosing a six-week window is that we want to include persons who have just left education or who have quit their job themselves, and these events involve a five-week sanction period, in which the person may not receive UI benefits."
Experimental Evidence on the Nature of the Danish Employment Miracle