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

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  • Torben M. Andersen

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

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.

Suggested Citation

  • Torben M. Andersen, 2011. "Social policies and activation in the Scandinavian welfare model: the case of Denmark," Economics Working Papers 2011-10, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2011-10
    as

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    File URL: ftp://ftp.econ.au.dk/afn/wp/11/wp11_10.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Richard Rogerson, 2007. "Taxation and market work: is Scandinavia an outlier?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(1), pages 59-85, July.
    3. Torben M. Andersen & Michael Svarer, 2014. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," Economica, London School of Economics and Political Science, vol. 81(321), pages 86-116, January.
    4. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages 452-477, November.
    5. Marimon, Ramon & Zilibotti, Fabrizio, 1999. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economic Journal, Royal Economic Society, vol. 109(455), pages 266-291, April.
    6. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, RWI - Leibniz-Institut für Wirtschaftsforschung.
    7. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity: Labour Market Performance in Denmark," CESifo Economic Studies, CESifo, vol. 53(3), pages 389-429, September.
    8. Lennart Erixon, 2010. "The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival," Journal of Economic Issues, Taylor & Francis Journals, vol. 44(3), pages 677-715.
    9. 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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    Blog mentions

    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 20:02:00

    More about this item

    Keywords

    workfare; employment; distribution; welfare state;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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