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Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland

38 Pages Posted: 15 Oct 2004 Last revised: 14 Aug 2008

Ralf A. Wilke

Copenhagen Business School - Department of Economics; Center for European Economic Research (ZEW); Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Tomi Kyyrä

VATT Institute for Economic Research

Date Written: 2004

Abstract

In Finland the elderly unemployed are allowed to collect unemployment benefits up to the age of 60, when they can retire via a particular unemployment pension. In 1997 the eligibility age of persons benefiting from this scheme was raised from 53 to 55. We consider changes in the risk of unemployment, unemployment durations, and the exit states before and after the reform. In the duration analysis a flexible treatment design is adopted by allowing for quantile treatment effects. We apply three different non- and semiparametric methods, which all produce robust and coherent results. Since the reform the group aged 53-54 has had a lower risk of unemployment, shorter unemployment durations, and higher exit rates to employment, and it is no longer distinguishable from the group aged 50-52. We estimate the amount of unemployment benefits saved due to the reform.

Keywords: Unemployment insurance reform, quantile treatment effect, non- and semiparametric methods, Finnish register data

JEL Classification: J64, J26, C14, C41

Suggested Citation

Wilke, Ralf A. and Kyyrä, Tomi, Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland (2004). ZEW - Centre for European Economic Research Discussion Paper No. 04-063. Available at SSRN: https://ssrn.com/abstract=604443 or http://dx.doi.org/10.2139/ssrn.604443

Ralf A. Wilke (Contact Author)

Copenhagen Business School - Department of Economics ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Tomi Kyyrä

VATT Institute for Economic Research ( email )

Arkadiankatu 7
Helsinki, 00101
Finland
+3583045542 (Phone)

HOME PAGE: http://www.vatt.fi

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