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Economic Crises and Unemployment Persistence: Analysis of Job Losses During the Finnish Recession of the 1990s

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  • Jouko Verho

Abstract

This study estimates the effect of job loss for Finnish workers who were displaced during a severe recession in the early 1990s. The setting provides a sample of workers of which over 90% experienced unemployment after losing a job due to plant closure. We use linked employer–employee data to follow these workers up to 16 years after the job loss and to construct a closely matched comparison group of non‐displaced workers. We estimate a more than 58% initial drop in employment and earnings after the job loss. At the end of follow‐up, women's employment and earnings recover fully while men's employment remains 1–5% lower relative to the comparison groups, and men suffer a 5–8% earnings loss. We also find large effects on long‐term unemployment that diminish slowly, and long‐lasting effects on poverty risk.

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  • Jouko Verho, 2020. "Economic Crises and Unemployment Persistence: Analysis of Job Losses During the Finnish Recession of the 1990s," Economica, London School of Economics and Political Science, vol. 87(345), pages 190-216, January.
    • Handle: RePEc:bla:econom:v:87:y:2020:i:345:p:190-216
    DOI: 10.1111/ecca.12300
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    Cited by:

    1. Terhi Maczulskij & Ohto Kanninen & Hannu Karhunen & Ossi Tahvonen, "undated". "Debt Burden of Job Loss in a Nordic Welfare State," Working Papers 339, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    2. Terhi Maczulskij, 2019. "Occupational Mobility of Routine Workers," Working Papers 327, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    3. Liepmann, Hannah & Pignatti, Clemente, 2024. "Welfare effects of unemployment benefits when informality is high," Journal of Public Economics, Elsevier, vol. 229(C).
    4. Hirvonen, Johannes & Kässi, Otto & Ropponen, Olli, 2023. "Jobs, Workers, and Firms: Dissecting the Labour Market Effects of Finland’s COVID-19 Subsidy Program," ETLA Working Papers 111, The Research Institute of the Finnish Economy.
    5. Nitya Mittal & Janina Isabel Steinert & Sebastian Vollmer, 2023. "COVID-19 pandemic, losses of livelihoods and uneven recovery in Pune, India," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    6. Salokangas, Henri & Böckerman, Petri & Huikari, Sanna & Korhonen, Marko & Korpelainen, Raija & Svento, Rauli, 2022. "Did the Finnish depression of the early 1990s have a silver lining? The effect of unemployment on long-term physical activity," Economics & Human Biology, Elsevier, vol. 46(C).

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