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Labour Market Policy and Unemployment - A Job Flow Model of Finland

  • Pekka Sinko
  • Pasi Holm
  • Pekka Tossavainen
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    In this study a numerical search equilibrium model of labour markets is applied to the Finnish data in order to analyse the factors behind the record high unemployment of the early 90?s. Job creation and job destruction are endogenously determined from the dynamic optimising behaviour of firms and workers. We find that the labour market policy account for a remarkable part of the Finnish structural unemployment, but cannot explain the adverse development of employment over time. Instead, our analysis suggests that the upsurge in unemployment can be attributed to the increased uncertainty concerning the future productivity.

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    File URL: http://www.vatt.fi/file/vatt_publication_pdf/k210.pdf
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    File URL: http://www.vatt.fi/publications/latestPublications/publication/Publication_1345_id/220
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    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 210.

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    Date of creation: 01 Jan 1999
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    Handle: RePEc:fer:dpaper:210
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    1. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
    2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
    3. Andrew Hildreth & Stephen Millard & Dale Mortensen & Mark Taylor, 1998. "Wages, work, and unemployment," Applied Economics, Taylor & Francis Journals, vol. 30(11), pages 1531-1547.
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