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Combining Part-time Work and Social Benefits: Empirical Evidence from Finland

Author

Listed:
  • Salla Kalin

    (Labour Institute for Economic Research Labore)

  • Tomi Kyyrä

    (VATT Institute for Economic Research)

  • Tuomas Matikka

    (VATT Institute for Economic Research)

Abstract

We use detailed, population-wide data from Finland to provide evidence of the impact of earnings disregard policies on part-time work during unemployment spells.The share of part-time workers among benefit recipients increased sharply from 10% to 18% over a few years after the implementation of earnings disregards in unemployment beneifts and housing allowances, which allowed individuals to earn up to 300 euros per month without reductions in their benefits. Using variation in the impact of the reforms on incentives between individuals eligible for different types of benefits, we estimate a 21–30% increase in participation in part-time work due to the implementation of earnings disregards. On average, we find no economically sizable effects of the earnings disregards on future full-time employment or the likelihood of leaving unemployment benefits, but find moderate positive employment effects among those unemployed individuals who are more attached to the labor market.

Suggested Citation

  • Salla Kalin & Tomi Kyyrä & Tuomas Matikka, 2025. "Combining Part-time Work and Social Benefits: Empirical Evidence from Finland," Working Papers 36, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:36
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    File URL: https://verotutkimus.fi/verotutkimus/wp-content/uploads/2025/09/FIT-WP-36-Kalin-Kyyra-Matikka-Earnings-Disregards.pdf
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    Keywords

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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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