Too Much Stick for the Carrot? Job Search Requirements and Search Behaviour of Unemployment Benefit Claimants

This paper investigates the effects of stricter job search-related conditions for Unemployment Insurance (UI) eligibility on the job search behaviour of claimants. Estimation makes use of exogenous variation introduced by the UK Jobseeker’s Allowance. A significant share of claimants is found to leave the register increasing search intensity as well as request for job search assistance from Public Employment Centres. Exits with increased search are performed predominantly by liquidity constrained individuals. This evidence suggests that tighter search conditionality can lead committed jobseekers to un-subsidized search, reducing the capacity of UI to protect workers against the risk of unemployment.