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Social policies and activation in the Scandinavian welfare model: the case of Denmark

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  • Torben M. Andersen

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    (Department of Economics and Business, Aarhus University, Denmark)

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    Abstract

    Scandinavian countries are characterized by a generous tax-financed social safety net which provides insurance and performs a redistributive role. While contributing to lower inequality it may imply that incentives to work are low, and yet employment rates are high. How have the Scandinavian countries been able to reconcile social objectives with a high employment level? It is argued that the Scandinavian welfare model has a strong employment focus both because it is an important element in social policy based on social inclusion, but also because a collective welfare arrangement is only financially viable if (private) employment is sufficiently high. To ensure this, the social safety net includes a number of employment conditionalities (active labour market policies/workfare) to balance income protection with an employment focus. These policies are discussed using Denmark as an example and empirical evidence is presented. The criticism of workfare is also briefly discussed.

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    Bibliographic Info

    Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2011-10.

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    Length: 27
    Date of creation: 08 Sep 2011
    Date of revision:
    Handle: RePEc:aah:aarhec:2011-10

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    Web page: http://www.econ.au.dk/afn/

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    Keywords: workfare; employment; distribution; welfare state;

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    1. Marimon, Ramon & Zilibotti, Fabrizio, 1999. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economic Journal, Royal Economic Society, vol. 109(455), pages 266-91, April.
    2. Michael Rosholm & Michael Svarer, 2004. "Estimating the Threat Effect of Active Labour Market Programmes," CAM Working Papers 2004-14, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    3. Lennart Erixon, 2010. "The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 44(3), pages 677-715, September.
    4. Richard Rogerson, 2007. "Taxation and Market Work: Is Scandinavia an Outlier?," NBER Working Papers 12890, National Bureau of Economic Research, Inc.
    5. David Card & Jochen Kluve & Andrea Weber, 2009. "Active Labor Market Policy Evaluations – A Meta-analysis," Ruhr Economic Papers 0086, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity – labour market performance in Denmark," Economics Working Papers 2007-09, School of Economics and Management, University of Aarhus.
    7. Torben M. Andersen & Michael Svarer, 2008. "The role of workfare in striking a balance between incentives and insurance in the labour market," Economics Working Papers 2008-05, School of Economics and Management, University of Aarhus.
    8. Diamond, Peter A, 1981. "Mobility Costs, Frictional Unemployment, and Efficiency," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 798-812, August.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why Scandinavian social policies work
      by Economic Logician in Economic Logic on 2012-03-16 15:02:00

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