Jaakko Pehkonen

Unemployment and home-ownership

Oswald (mimeo, University of Warwick, 1996) theorizes that a secular rise in homeownership constitutes a possible explanation for the observed rise in unemployment in Europe. Our results provide support for this notion. In particular, the results based on the regional data on Finnish labour districts imply that a 10% difference in the owneroccupation rate is associated with a 1 percentage point difference in the unemployment rate. The results are tentative, since the regressions are based on a small number of observations.

Personality and Labour Market Income: Evidence from Longitudinal Data

This study contributes to the literature on how personality is rewarded in the labour market by examining the relationship between personality and labour market income. Our results suggest that adulthood extraversion is positively associated with income when education, work experience, and unemployment history, measured prospectively from longitudinal data, are controlled for. In addition, childhood constructiveness indicating active and well-controlled behaviour has a positive association with income in adulthood.

Returns to scale in a matching model: evidence from disaggregated panel data

The returns to scale in the matching function play an important role in models with endogenous search effort. Due to positive externalities, increasing returns to scale in matching can support high or low activity equilibrium in the labour market. In this study, we examine this issue using panel data from Finnish employment offices. The study finds that the results from the Cobb–Douglas and translog specification are qualitatively different. The CD specification of the matching function exhibits constant returns to scale. The translog specification, in turn, exhibits increasing returns to scale. The elasticity estimate for returns, using the preferred specification and minimum and maximum sample values for job seekers and vacancies, fall in the range of 1.1 to 1.6.

Institutions, Incentives and Trade Union Membership

The study investigates the determinants of unionization in a country - Finland - where union density, defined as the number of unionized members divided by the labour force, has risen 60 percentage points in 32 years, from 22 percent in 1960 to 82 percent in 1992. The theoretical framework of the study is based on the background information obtained from surveys inquiring why individuals join a union. The empirical analysis for the period 1962-92 shows that the model is capable of explaining long-run trends in union density in a very satisfactory manner. The results imply that institutional features of the labour market, characterized by the benefit mark-up variable and a dummy variable capturing labour legislation and public policy toward unionization, play an important role in the development of union density. An interesting policy implication of the study is the prediction that union density would fall considerably if earnings-related unemployment allowances were to be cut to the level of the basic unemployment allowances. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 1997.

Matching Inefficiencies, Regional Disparities, and Unemployment

In this paper we apply a stochastic frontier approach to examine how matching efficiency and regional differences in structural factors contribute to regional and aggregate unemployment. Our results suggest that there would be a substantial decline in aggregate unemployment if (i) all local labour offices operated with full efficiency or (ii) they shared the same structure of job seekers and vacant jobs as the most favourable office. In the former case an increase in hirings would lower the average unemployment rate by 2.4 percentage points. In the latter case the decrease would be 1.4 percentage points. Further, we find that fixed effects are positively c0orrelated with both a more favourable structure and higher efficiency. This suggests that the fixed effects may capture some part of time invariant features in the structure and efficiency. Thus, the role of structural factors and efficiency in regional unemployment disparities may be higher than estimated.

Real wages-employment relationship in Finnish manufacturing: a VAR approach

Grangers concept of causality and the vector autoregressive(VAR) technique is used to investigate the real wages-employment relationship in Finnish manufacturing. The stationarity of the time series is examined and a number of co-integration tests for the adequacy of a pure VAR specification performed. The results using a bivariate VAR model based on a lag structure determined by Akaikes information criterion suggests that real wages Granger-cause employment. The slight non-constancy of the model suggests, however, that the conclusion concerning the nature of the real wages-emploment relationship should be treated with causion.

Employment, unemployment and output growth in booms and recessions: time series evidence from Finland, 1970-1996

The Finnish economy experienced dramatic changes in the early 1990s. The collapse of the economy in 1991 resulted in a 12% decline in GDP over the years 1991–1993, leading to a significant fall in the demand for labour and a rise in unemployment. The study contributes to the discussion on possible changes in the functioning of the Finnish economy by scrutinizing the stability of the employment/unemploymentoutput relation. The empirical analysis, based on aggregate variables from the period 1975–1996, suggests that the relationship between aggregate-level employment/ unemployment and output growth remained relatively stable throughout the investigation period.

Trade Union Objectives and the Cyclical Variability of Wages and Employment

The purpose of this paper is to investigate whether a simple monopoly union model of wage and employment determination is consistent with the cyclical movements of wages and employment observed in the Finnish manufacturing and mining sector. Estimation of the two-equation model implies that considerably less weight is placed on the variability of employment relative to that of wages in the unions objective function. The findings are consistent with the observed cyclical inflexibility of real wages relative to employment. However, because the data fail to accept certain parameter restrictions embodied in the different model specifications, the study raises doubts about the adequacy of the simple monopoly union model to explain the data generation process. Copyright 1990 by The editors of the Scandinavian Journal of Economics.

Income and Physical Activity among Adults: Evidence from Self-Reported and Pedometer-Based Physical Activity Measurements

This study examined the relationship between income and physical activity by using three measures to illustrate daily physical activity: the self-reported physical activity index for leisure-time physical activity, pedometer-based total steps for overall daily physical activity, and pedometer-based aerobic steps that reflect continuous steps for more than 10 min at a time. The study population consisted of 753 adults from Finland (mean age 41.7 years; 64% women) who participated in 2011 in the follow-up of the ongoing Young Finns study. Ordinary least squares models were used to evaluate the associations between income and physical activity. The consistency of the results was explored by using register-based income information from Statistics Finland, employing the instrumental variable approach, and dividing the pedometer-based physical activity according to weekdays and weekend days. The results indicated that higher income was associated with higher self-reported physical activity for both genders. The results were robust to the inclusion of the control variables and the use of register-based income information. However, the pedometer-based results were gender-specific and depended on the measurement day (weekday vs. weekend day). In more detail, the association was positive for women and negative or non-existing for men. According to the measurement day, among women, income was positively associated with aerobic steps despite the measurement day and with totals steps measured on the weekend. Among men, income was negatively associated with aerobic steps measured on weekdays. The results indicate that there is an association between income and physical activity, but the association is gender-specific and depends on the measurement type of physical activity.

Displacement Effects of Active Labour Market Policy: The Youth Labour Market in Finland

In 1994 the number of workers participating in active labour market programmes in Finland was 299,000. On average there where 125,000 workers in these programmes at any one time, the average length of participation in a programme being about 5 months. In relation to the 2.5 million-strong Finnish labour force, these figures are proportionally large. In 1994 the total expenditure on unemployment amounted to 6.7 per cent of GNP of which the share spent on active labour market programmes was about 25 per cent. The study investigates the displacement effects of active labour market programmes in the youth labour market in Finland. The two age groups analysed are 15-19-year-olds and 20-24-year-olds. The results, based on a VAR analysis of quarterly data from the period 1981.1-1995.2, suggest that the displacement effects of job-creation programmes may be substantial. The study cannot, however, provide any robust estimates of the likely size of such displacement effects on youth employment in Finland.