The costs of unemployment, the effect of unemployment security on labour market behaviour, and employment services

Abstract

The working paper consists of three separate parts. The first compares the magnitude of the costs of unemployment and their distribution among the various parties in Finland, Sweden, Denmark, and Germany. The costs taken into account include the costs of dismissal, unemployment security expenditure, and income losses caused by unemployment. The costs vary between countries, in particular on the basis of the magnitude of their components. In Finland, none of the cost components was found to be particularly large or small. The second section of the working paper is a literature review of research examining the effects of unemployment benefits on labour market behaviour. The level and maximum duration of unemployment security benefits have been found to lengthen unemployment spells, although estimates of the magnitude of the effect vary considerably. The effect has also been found to depend on the cyclical situation. The effect appears to be smaller when unemployment is at a high level and jobs are not available. The final section of the working paper examines how employment services are targeted towards the latter stages of the earnings-related benefit period and how they affect employment. Employment services do not appear to be targeted specifically at the latter stages of the benefit period, although this observation is based on a very rough analysis and must be treated with caution. In Finnish research literature, labour market training has often been found to improve the employment prospects of those who participate in it. The employment effect of subsidised employment appears to depend on its target: placement in the public sector does not appear to have improved employment prospects, but placement in the private sector has often been found to have positive effects. (AI translation)

• ISSN: 1795-1801 (Online)
• ISBN: 978-952-209-149-9 (Online)
• Publication in PDF-format