Study finds little justification for ending unemployed workers' earnings buffer
Not long ago, unemployed jobseekers could earn up to 300 euros a month while receiving benefits.
A recent study has found limited justification for ending the monthly earnings buffer of up to 300 euros for unemployed workers, which the Finnish government removed in 2024. The allowance aimed to incentivize jobseekers to pursue full-time employment, but the study by the Labour Institute for Economic Research, Tampere University, and the VATT Institute for Economic Research contradicts that purpose.
Instead, the exemption appears to have increased the likelihood of unemployed individuals taking part-time work. The study, published in the Journal of Public Economics, analyzed data from benefits agency Kela and unemployment funds, examining the impact of a 2015 housing allowance reform. This reform aimed to make part-time work more financially attractive for those receiving housing assistance.
Comparing two groups of unemployed individuals—those receiving housing allowance and those who did not—the researchers found no evidence that the income exemption reduced their chances of eventually securing full-time employment. In fact, the findings suggest that the policy may have had a positive impact, as it potentially encouraged more people to take up part-time work.
Written by urgent.news from Yle News Finland's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
