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Economic Crises and Unemployment Persistence: Analysis of Job Losses During the Finnish Recession of the 1990s

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  • Jouko Verho

Abstract

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.

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  • Jouko Verho, 2020. "Economic Crises and Unemployment Persistence: Analysis of Job Losses During the Finnish Recession of the 1990s," Economica, London School of Economics and Political Science, vol. 87(345), pages 190-216, January.
    • Handle: RePEc:bla:econom:v:87:y:2020:i:345:p:190-216
    DOI: 10.1111/ecca.12300
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    Cited by:

    1. Terhi Maczulskij, 2024. "Occupational Mobility of Routine Workers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(5), pages 1198-1229, October.
    2. Hirvonen, Johannes & Kässi, Otto & Ropponen, Olli, 2023. "Jobs, Workers, and Firms: Dissecting the Labour Market Effects of Finland’s COVID-19 Subsidy Program," ETLA Working Papers 111, The Research Institute of the Finnish Economy.
    3. Terhi Maczulskij & Ohto Kanninen & Hannu Karhunen & Ossi Tahvonen, "undated". "Debt Burden of Job Loss in a Nordic Welfare State," Working Papers 339, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    4. Liepmann, Hannah & Pignatti, Clemente, 2024. "Welfare effects of unemployment benefits when informality is high," Journal of Public Economics, Elsevier, vol. 229(C).
    5. Nitya Mittal & Janina Isabel Steinert & Sebastian Vollmer, 2023. "COVID-19 pandemic, losses of livelihoods and uneven recovery in Pune, India," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    6. Salokangas, Henri & Böckerman, Petri & Huikari, Sanna & Korhonen, Marko & Korpelainen, Raija & Svento, Rauli, 2022. "Did the Finnish depression of the early 1990s have a silver lining? The effect of unemployment on long-term physical activity," Economics & Human Biology, Elsevier, vol. 46(C).

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