Labour Market Policy and Unemployment - A Job Flow Model of Finland

Pekka Sinko, Pasi Holm and Pekka Tossavainen

No 210, Discussion Papers from VATT Institute for Economic Research

Abstract: In this study a numerical search equilibrium model of labour markets is applied to the Finnish data in order to analyse the factors behind the record high unemployment of the early 90?s. Job creation and job destruction are endogenously determined from the dynamic optimising behaviour of firms and workers. We find that the labour market policy account for a remarkable part of the Finnish structural unemployment, but cannot explain the adverse development of employment over time. Instead, our analysis suggests that the upsurge in unemployment can be attributed to the increased uncertainty concerning the future productivity.

Keywords: Matching models; structural unemployment; labour market policy.; Labour market; Työmarkkinat; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka; C600 - Mathematical Methods and Programming: General; J600 - Mobility; Unemployment; and Vacancies: General (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (4)

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