This paper sets out how we used instrumental variables to estimate the impact of benefit sanctions on the employment outcomes of sanctioned individuals in the Work Programme – a large welfare-to-work programme for the long-term unemployed.

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In November 2016, our report Benefit sanctions considered whether the Department for Work & Pensions (the Department) is achieving value for money in its administration of benefit sanctions. A benefit sanction is a penalty imposed on a benefit claimant by the Department. It is a decrease or loss of a benefit imposed on claimants who do not meet conditions without good reason.

The Department has not undertaken research to understand the employment impact of benefit sanctions but cites international evidence on the topic. To demonstrate that such analysis is possible using the Department’s data, and to provide evidence about the impact of sanctions in Great Britain, we conducted econometric analysis using administrative data from the Department.