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Benefits conditional on work and the Nordic model

Listed author(s):
  • Kolm, Ann-Sofie
  • Tonin, Mirco

Welfare benefits in the Nordic countries are often tied to employment. We argue that this is one of the factors behind the success of the Nordic model, where a comprehensive welfare state is associated with high employment. In a general equilibrium setting, the underlining mechanism works through wage moderation and job creation. The benefits make it more important to hold a job, thus lower wages will be accepted, and more jobs created. Moreover, we show that the incentive to acquire higher education improves, further boosting employment in the long run. These positive effects help in counteracting the negative impact of taxation.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047272714001406
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 127 (2015)
Issue (Month): C ()
Pages: 115-126

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Handle: RePEc:eee:pubeco:v:127:y:2015:i:c:p:115-126
DOI: 10.1016/j.jpubeco.2014.05.010
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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