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

Tomi Kyyrä and Ralf Wilke

Journal of the European Economic Association, 2007, vol. 5, issue 1, 154-182

Abstract: In several European countries the elderly unemployed are allowed to collect unemployment benefits up to a certain age limit, after which they can retire via some early retirement scheme. In Finland the eligibility age of persons benefiting from this kind of scheme was raised from 53 to 55 in 1997. We consider layoff risks, unemployment durations, and the exit states before and after the reform. 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 almost indistinguishable from the group aged 50-52. We estimate that the amount of unemployment benefits saved due to the reform is close to €100 million for each age cohort turning 53. (JEL: J64, J26, C14, C41) (c) 2007 by the European Economic Association.

Date: 2007
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