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Effects of face-to-face counselling on unemployment rate and duration: evidence from a Public Employment Service reform

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  • Ville Vehkasalo

    (National Audit Office of Finland)

Abstract

In a Public Employment Service reform implemented in 2013, sixty Finnish municipalities experienced an involuntary employment office closure. The Government’s objective was to replace traditional face-to-face employment counselling with modern online counselling and simultaneously generate savings in outlays. The reform created natural experiment circumstances that allowed us to estimate the aggregate causal effects of face-to-face counselling and advice. We estimated the effects of the reform on the unemployment rate and the average unemployment duration using municipality-level panel data and various panel data estimators. We found that while the reform had a barely discernible effect on municipal unemployment rates, it increased average unemployment durations by 2–3 weeks. Hence, face-to-face counselling and online counselling are not perfect substitutes in decreasing the length of unemployment spells. Consequently, the fiscal costs of the reform outweigh the fiscal benefits by a large margin.

Suggested Citation

  • Ville Vehkasalo, 2020. "Effects of face-to-face counselling on unemployment rate and duration: evidence from a Public Employment Service reform," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    • Handle: RePEc:spr:jlabrs:v:54:y:2020:i:1:d:10.1186_s12651-020-00276-8
    DOI: 10.1186/s12651-020-00276-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Counselling; Reform; Unemployment; Microdata;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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