Economic crises and unemployment persistence: Analysis of job losses during the Finnish 1990s recession

Jouko Verho

No 99, Working Papers from VATT Institute for Economic Research

Abstract: This study estimates the effect of job loss for Finnish workers displaced during a severe recession in the early 1990s. The setting provides a sample of workers of which over 90% experienced unemployment after losing a job due to plant closure. We use linked employer-employee data to follow these workers up to 16 years after the job loss and to construct a closely matched comparison group of non-displaced workers. We estimate over 58% initial drop in employment and earnings after the job loss. At the end of follow-up, women's employment and earnings recover fully while men's employment remains 1–5% lower relative to the comparison groups and they suffer a 5–8% earnings loss. We also find large effects on long-term unemployment that diminish slowly and long-lasting effects on poverty risk.

Keywords: unemployment; plant closings; Labour markets and education; J64; J65 (search for similar items in EconPapers)
Date: 2017
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