Economic Crises and Unemployment Persistence

Analysis of Job Losses During the Finnish Recession of the 1990s

Bibliographic Data

ID9727787
AuthorsJouko Verho (0000-0002-9483-7092, VATT Institute for Economic Research Helsinki, corresponding author)
Year2020
Volume87
Issue345
Pages190-216
Publication date2020-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12300
OpenAlexW2910663413
LanguageEN
Citations received3
References cited27

This study estimates the effect of job loss for Finnish workers who were 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 a more than 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 men 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

Closure (psychology) · Demographic economics · Displaced workers · Earnings · Economic growth · Economics · Job loss · Labour economics · Persistence (discontinuity) · Poverty · Recession · Sample (material) · Unemployment · Employment and Welfare Studies · Labor market dynamics and wage inequality · Retirement, Disability, and Employment