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

  • Torben M. Andersen

    ()

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

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    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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    File URL: ftp://ftp.econ.au.dk/afn/wp/11/wp11_10.pdf
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    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
    Contact details of provider: Web page: http://www.econ.au.dk/afn/

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    1. Rosholm, Michael & Svarer, Michael, 2004. "Estimating the Threat Effect of Active Labour Market Programmes," IZA Discussion Papers 1300, Institute for the Study of Labor (IZA).
    2. Torben Andersen & Michael Svarer, 2008. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," CESifo Working Paper Series 2267, CESifo Group Munich.
    3. Card, David & Kluve, Jochen & Weber, Andrea, 2009. "Active Labor Market Policy Evaluations: A Meta-Analysis," IZA Discussion Papers 4002, Institute for the Study of Labor (IZA).
    4. Torben Andersen & Michael Svarer, 2007. "Flexicurity – Labour Market Performance in Denmark," CESifo Working Paper Series 2108, CESifo Group Munich.
    5. Ramon Marimon & Fabrizio Zilibotti, 1997. "Unemployment vs. mismatch of talents: Reconsidering unemployment benefits," Economics Working Papers 211, Department of Economics and Business, Universitat Pompeu Fabra.
    6. 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.
    7. Richard Rogerson, 2007. "Taxation and market work: is Scandinavia an outlier?," Economic Theory, Springer, vol. 32(1), pages 59-85, July.
    8. Erixon, Lennart, 2008. "The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival," Research Papers in Economics 2008:2, Stockholm University, Department of Economics.
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