Unemployment in Finland – a regional perspective

Introduction

Finland has been torn by uneven regional development since the 1990s. Economic growth has been rapid in Southern Finland and in the growth centers along the coast. In vast areas of Eastern and Northern Finland, recovery from the deep recession of the early 1990s has been sluggish.

The article examines the problem of unemployment in Finland from a regional perspective. The analysis is primarily based on a labor market district classification. The growth of regional disparities is clearly evident when specifically looking at the labor markets. Unemployment has remained at a high level in Eastern and Northern Finland. The worsening of regional unemployment disparities has also intensified migration to Southern Finland. As a result, opportunities for development have dwindled in the areas of high out-migration, while on the other hand, there is a housing problem in the congested growth centers.

In the first section, a brief overview is provided of the explanations given in economic literature for regional disparities in unemployment and their applicability to Finland is discussed. The second section examines the key structural features of regional unemployment in Finland, such as the magnitude and temporal persistence of regional unemployment disparities, as well as the employment effectiveness of economic growth, the nature of unemployment, and the matching of labor markets from a regional perspective. It also looks at how regional labor markets have adapted to changes in labor demand. The third section explores the development of regional unemployment disparities during the 1980s and 1990s. Additionally, it discusses the main economic factors that have contributed to the widening of these disparities in the 1990s. The fourth section focuses on economic policy issues, mapping the regional structure of unemployment benefits and active labor market policies, as well as the changes that occurred in these during the 1990s. The fifth section examines the outlook for regional labor markets in the near future based on a regional forecast prepared in collaboration by ETLA Economic Research, Labour Institute for Economic Research, and Pellervo economic research.

• ISSN: 1457-2923
• ISBN: 952-5071-46-4
• Publication in PDF-format