Research Discussion Papers, Bank of Finland
Unintended convergence – how Finnish unemployment reached the European level
() and Roope Uusitalo
Abstract: Finnish unemployment rose in the early 1990s from 3% to
18% in just four years. It has since fallen back to the average European
level, being 9.0% in January 2003. In this paper, we describe the shocks
leading to this unforeseen increase in unemployment. We then discuss and
research the role of labour market institutions in the adjustment process
that has brought unemployment back to a ‘normal’ level. We argue that these
institutions cannot be blamed for the increase in unemployment, but that
more flexible institutions could have led to a more rapid fall in
unemployment once the Finnish economy began to recover.
Keywords: economic crisis; labour market institutions; unemployment; (follow links to similar papers)
JEL-Codes: E32; J51; J64; (follow links to similar papers)
35 pages, January 1, 2004
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