CLS Working Papers, Centre for Labour Market and Social Research, Aarhus School of Business, University of Aarhus
Danish Labour Market Policy: Is it worth it?
Abstract: Denmark has been quite succesfull in reducing
unemployment. At the same time the costs of creating activation and other
schemes have been very high. OECD judges that total costs are about 5% of
GDP, which is the highest amount among OECD-countries. This paper presents
a comprehensive description of the recent Danish labour market policies.
The paper goes through all the different programmes and shows that most of
the measures introduced have increased the reservation wages of job
seekers. The result was a sharp growth in the number of participants on a
number of new programmes for the unemployed and for those seeking
alternatives to work. The total number of people on some sort of passive or
active scheme rose until late in the 90ís where admission to programmes was
restricted and a strong economic upswing created new demand for labour. A
final analysis of the probability that an unemployed person becomes
employed, based on individual transition data, shows that the new labour
market policies introduced after 1993 did not increase the probability that
an unemployed person would get a job. However, there is a positive effect
in 1997 and 1998 coinciding with the attempts to tighten admission to
Keywords: Unemployment; Labour market policies; Denmark; (follow links to similar papers)
JEL-Codes: J21; (follow links to similar papers)
20 pages, November 1, 2001
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