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

Tomi Kyyrä and Ralf Wilke

No 396, Discussion Papers from VATT Institute for Economic Research

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. In the duration analysis a flexible treatment design is adopted by allowing for quantile treatment effects. 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 euros for each age cohort turning 53.

Keywords: Unemployment insurance reform; quantile treatment effect; duration analysis; Finnish register data; Labour market; Työmarkkinat; Social security; Sosiaaliturva; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ias and nep-lab
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Citations: View citations in EconPapers (1)

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