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...

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...