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

Salla Kalin (salla.kalin@helsinki.fi), Tomi Kyyrä and Tuomas Matikka
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Salla Kalin: University of Helsinki

No 21, Working Papers from Finnish Centre of Excellence in Tax Systems 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, and describe the longer-run trends in combining part-time work and social benefits. We find that part-time work while receiving unemployment benefits is strongly concentrated in the service and social and health care sectors, and that women participate in part-time work much more commonly than men (25% vs. 12% of benefit recipients). 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 benefits 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 16–28% increase in participation in part-time work due to the implementation of earnings disregards. However, we find no evidence of economically significant positive or negative effects of increased participation in part-time work on transitions to full-time employment.

Keywords: labor supply; social benefts; part-time work; earnings disregards (search for similar items in EconPapers)
JEL-codes: H24 J21 J22 (search for similar items in EconPapers)
Pages: 66
Date: 2024-04
New Economics Papers: this item is included in nep-eur, nep-lma and nep-pbe
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Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research

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Related works:
Working Paper: Combining Part-Time Work and Social Benefits: Empirical Evidence from Finland (2024)
Working Paper: Combining Part-time Work and Social Benefits: Empirical Evidence from Finland (2023)
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