Unemployment Insurance in Finland: A Review of Recent Changes and Empirical Evidence on Behavioral Responses

Abstract

The goal of this report is twofold. The first is to provide an overview of the Finnish unemployment insurance (UI) system. We describe all major changes in eligibility criteria, benefit levels and benefit durations since 2000. We also assess how these have changed the overall generosity of the benefit scheme over time. The second is to summarize what we know about the effects of UI benefits in the context of the Finnish labor market. For background we provide a brief look at the economic theory of UI, but our main focus is on empirical evidence on behavioral responses. We survey the existing evidence and present some new results for the effects of eligibility criteria, benefit levels and benefit durations on labor market outcomes in Finland.