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

Salla Kalin (), Tomi Kyyrä () and Tuomas Matikka ()
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Salla Kalin: Labour Institute for Economic Research Labore
Tomi Kyyrä: VATT Institute for Economic Research
Tuomas Matikka: VATT Institute for Economic Research

No 36, 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.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.

Keywords: labor supply; social benefits; part-time work; earnings disregards (search for similar items in EconPapers)
JEL-codes: H24 J21 J22 (search for similar items in EconPapers)
Pages: 60
Date: 2025-09
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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