In 2005, displaced workers in Finland with at least three years of work history were given the option to enroll in a Re-employment Program. Participants met with a caseworker at the beginning of their unemployment and drafted an employment plan. In return, they became eligible for higher benefits for four weeks, as well as for the duration of individually targeted training programs specified in their plan. The program aimed to provide early counseling, encourage participation in labor market training, and improve matches between training programs and job seekers. Using a difference-in-differences approach, we show that the program increased caseworker meetings and participation in training programs but had no effect on unemployment duration in the short run or employment in the longer run. The effect on training participation was particularly strong for men, older workers and low-skilled workers, yet unemployment and employment effects were equally disappointing across all subgroups.
We use detailed, population-wide data from Finland to describe the longer-run trends in combining part-time work and social benefits, and provide evidence of the impact of earnings disregard policies on part-time work. We find that part-time or temporary work while receiving unemployment benefits is strongly concentrated at service and health care sectors, and women participate in part-time work much more commonly than men. The share of part-time workers among benefit recipients increased sharply from 10% to over 15% over a few years after the implementation of earnings disregards in unemployment benefits and housing allowances. The earnings disregards allowed individuals to earn 300 euros per month without benefit reductions. Using variation in the impact of the reforms on incentives between individuals eligible to different types of benefits, we estimate a 35% increase in participation to part-time work due to the implementation of earnings disregards. However, we find no clear evidence of positive or negative effects of increased participation to part-time work on transitions to full-time employment.