Reciprocity and the interaction between the unemployed and the caseworker

Abstract

We investigate how negatively reciprocal traits of unemployed individuals interact with “sticks” policies that impose constraints on individual job search effort, in the context of the German welfare system. For this we merge survey data of long-term unemployed individuals, containing indicators of reciprocity, to a unique set of register data on all unemployed coached by the same team of caseworkers and treatments they receive. We find that the combination of a higher negative reciprocity and a stricter regime has a negative interaction effect on search effort exerted by the unemployed. The results are stronger for males than for females. Stricter regimes may drive long-term unemployed males with certain types of social preferences further away from the labor market.