The impact of vocational rehabilitation on employment outcomes: A regression discontinuity approach.

OBJECTIVES: Since 2015, Finnish disability pension applicants who are rejected or receive a short-term temporary pension have, under certain conditions, also received a preliminary decision for vocational rehabilitation (VR). A key requirement for eligibility is a certain amount of earnings during the previous five years (€34 910.29 in 2017). We exploit this discontinuity to examine the impact of assignment to VR on labor market outcomes. METHODS: All new disability pension applicants from 2015 to 2017 were included. Fuzzy regression discontinuity design was used to evaluate the impact of assignment to VR on employment, unemployment and earned income two years later among those close to the threshold (+/- €20 000) providing eligibility for the preliminary decision. Arguably, those just below and just above the earnings limit are similar to each other, allowing causal interpretation of the estimates. RESULTS: For each of the employment outcomes, we found a modest effect in the expected direction at the income threshold, but there is considerable uncertainty in these findings. On average, exceeding the income limit increased the probability of employment by 7.6 percentage points, but the estimate was far from statistical significance. Unemployment became slightly less common and earned income slightly increased, but the estimates were also clearly statistically non-significant. CONCLUSIONS: We found no consistent evidence of the impact of assignment to VR on employment outcomes among low-income disability pension applicants. However, given the narrow and specific study population, this should not be taken as evidence of ineffectiveness of VR more generally.

Trigger events and poverty transitions among young adults in Finland after leaving the parental home.

Studies have shown that leaving the parental home is associated with an increase in the risk of poverty. However, less is known about poverty dynamics after leaving the nest. Based on Finnish population register data, this research answers the question of how employment and demographic events affect poverty entries and exits among 18- to 24-year-olds in Finland. The follow-up of individuals starts when young adults move away from the parental home. In addition to descriptive methods, discrete-time event-history models are estimated. This study illustrates that changes in employment are typical and are, therefore, often associated with poverty transitions among young adults. Although demographic events are less common, when experienced, they often lead to poverty transitions. This study found that the effects of demographic events vary by gender. This study also illustrates that a move back to the parental home is more likely for some poor population subgroups than for others.