Distributional Impacts of Behavioral Effects – Ex-Ante Evaluation of the 2017 Unemployment Insurance Reform in Finland

Mauri Kotamäki, Jukka Mattila () and Jussi Tervola ()
Additional contact information
Jukka Mattila: Finland Chamber of Commerce, Helsinki, Finland.
Jussi Tervola: Social Insurance Institution of Finland (Kela), Current affiliation: National Institute for Health and Welfare (THL), Helsinki, Finland.

International Journal of Microsimulation, 2018, vol. 11, issue 2, 146-168

Abstract: In 2017, the potential duration of the Finnish earnings-related unemployment benefit was cut from 500 to 400 days (or 400 to 300 working days). We apply a microsimulation method to calculate both static and behavioral ex-ante effects of the reform on employment, public finances and income inequality. Relying on previous empirical literature, we employ three benefit elasticity levels. Individual heterogeneity is added by weighting the elasticities with estimated employment probabilities. According to the static scenario, the reform increases income inequality, albeit marginally. Accounting for the behavioral response mitigates the effect on inequality and more than doubles the effect on public finances.

Keywords: UNEMPLOYMENT INSURANCE; BEHAVIORAL EFFECTS; MICROSIMULATION; INEQUALITY (search for similar items in EconPapers)
JEL-codes: C15 H2 I3 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://microsimulation.org/IJM/V11_2/IJM_11_2_4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijm:journl:v11:y:2018:i:2:p:146-168

Access Statistics for this article

International Journal of Microsimulation is currently edited by Matteo Richiardi

More articles in International Journal of Microsimulation from International Microsimulation Association
Bibliographic data for series maintained by Jinjing Li ().