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Unemployment insurance systems include monitoring of unemployed workers and punitive sanctions if job search requirements are violated. The authors analyze the effect of sanctions on the ensuing job quality, notably on wage rates and hours worked, and they examine how often a sanction leads to a lower occupational level. The data cover the Swedish population over 1999-2004. They estimate duration models dealing with selection on unobservables. They use weighted exogenous sampling maximum likelihood to deal with the fact the data register is large whereas observed punishments are rare.
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