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Economic crises and unemployment persistence: Analysis of job losses during the Finnish 1990s recession

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  • Verho, Jouko

Abstract

This study estimates the effect of job loss for Finnish workers 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 over 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 they 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.

Suggested Citation

  • Verho, Jouko, 2017. "Economic crises and unemployment persistence: Analysis of job losses during the Finnish 1990s recession," Working Papers 99, VATT Institute for Economic Research.
  • Handle: RePEc:fer:wpaper:99
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    File URL: https://www.doria.fi/handle/10024/148936
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    References listed on IDEAS

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    More about this item

    Keywords

    unemployment; plant closings; Labour markets and education; J64; J65;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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