Effects of face-to-face counselling on unemployment rate and duration: evidence from a Public Employment Service reform

Ville Vehkasalo ()
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Ville Vehkasalo: National Audit Office of Finland

Journal for Labour Market Research, 2020, vol. 54, issue 1, 1-14

Abstract: Abstract In a Public Employment Service reform implemented in 2013, sixty Finnish municipalities experienced an involuntary employment office closure. The Government’s objective was to replace traditional face-to-face employment counselling with modern online counselling and simultaneously generate savings in outlays. The reform created natural experiment circumstances that allowed us to estimate the aggregate causal effects of face-to-face counselling and advice. We estimated the effects of the reform on the unemployment rate and the average unemployment duration using municipality-level panel data and various panel data estimators. We found that while the reform had a barely discernible effect on municipal unemployment rates, it increased average unemployment durations by 2–3 weeks. Hence, face-to-face counselling and online counselling are not perfect substitutes in decreasing the length of unemployment spells. Consequently, the fiscal costs of the reform outweigh the fiscal benefits by a large margin.

Keywords: Counselling; Reform; Unemployment; Microdata (search for similar items in EconPapers)
JEL-codes: C23 H76 J64 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1186/s12651-020-00276-8

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