Work in progress

Do higher benefits for labour market training enhance re-employment? (with Jouko Verho)

Since 2005, unemployed workers in Finland with sufficient work history have had an option to enrol in an “employment promotion” program. Compliers meet a caseworker at the beginning of their unemployment and draft an individual-specific employment plan. In return, they can collect higher unemployment benefits for 4 weeks and receive higher compensation whenever they participate in the labour market training programs specified in the employment plan. The aim of the program was to encourage labour market training participation and to improve matches between training program slots and unemployed applicants. We evaluate the impact of this reform on unemployment duration by comparing eligible and ineligible workers before and after the reform. We find a moderate reduction in unemployment duration. The reform increased participation in labour market training in some groups but did not improve their effectiveness.

Combining part-time work and social benefits: Empirical evidence from Finland (with Tuomas Matikka and Salla Kalin)

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.