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Nordic Welfare: A DIY Guide

Nordic Welfare: A DIY Guide. Jon Kvist Centre for Welfare State Research University of Southern Denmark. Denmark – the land of fairytales. and LEGO. High equality. Between rich and poor Between men and women Incomes Employment Earnings Subjective measures. High employment. For all

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Nordic Welfare: A DIY Guide

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  1. Nordic Welfare:A DIY Guide Jon Kvist Centre for Welfare State Research University of Southern Denmark

  2. Denmark – the land offairytales and LEGO

  3. High equality Between rich and poor Between men and women Incomes Employment Earnings Subjective measures

  4. High employment For all Particularly for women The higher the skills, the higher the employment High employment is important: To increase welfare To finance welfare Without high employment, no “welfairytale”  how to make the welfare model employment-friendly?

  5. Question: The Welfare Puzzle Generous cash benefits High taxes ≠ = Low wage inequality High employment Answer: Employment-friendly policies Activation requirement polices moral hazard Encompassing labour, social, educational and health services that helps to create, maintain and utilize human capital

  6. Nordic approach • Goal is to maximise the realization of human capital for all • Almost all public policies are directed towards increasing work • Welfare model not only about securing a safety net or providing insurance and compensation, but also social investments

  7. Social investments over the life course Childhood Youth Fertille Working age Old

  8. Social investments: Example of policies Care for children and elderly, leave schemes Primary, secondary and tertiary education Early childhood education and care Life-long learning, ALMP Home help, health care Childhood Youth Fertille Working age Old

  9. Social investments: Returns Rate of return Cognitive skills Competences and knowledge Children Skills and taxes Less expenses Childhood Youth Fertile Working aged Old age

  10. The Welfare Circus (Re)distribution Insurance Social investments Safety

  11. Equity versus efficiency Standard focus Negative trade-off through distortions from redistributive policies • Scandinavian focus • Insurance promotes • risk behaviour • Human capital investments • increase qualifications • Cash benefits are • automatic stabilizers • Moral hazard can be policed

  12. Life satisfaction UK DK

  13. Organisation of welfare services Municipalities (98) State Regions (5) Authority to tax Legislate on cashbenefits Tertiaryeducation Authority to tax Social services • Childcare • Elderlycare Education Employment services Somehealth services In part reimbursed in part by state for cashbenefits Inter-municipalredistribution No authority to tax Health services

  14. Active labour market policies Workfare intensity Targetted programmes: Training Education Short programmes Counciling Job search courses Job search Contact to job exchange Duration of unemployment spell

  15. Changing demographics GBR Changing household composition Ageing populations More ethnic diverse populations DK Challenges • (Re)conciliation of work and family life • Less people to care and finance more elderly • Maintain solidarity

  16. Trust in others GBR DK

  17. The way we combine Lego bricks constitute our welfare societies Employment protection + ÷ ÷ + Social security + ÷ + ÷ Active labour market policies ÷ + ÷ Social services ÷ …. AND THUS THEIR SOCIAL AND ECONOMIC SUSTAINABILITY

  18. Lego bricks in the Danish model

  19. In short • By whom, where and when you are born matters for your life chances • No big trade-off between efficiency and equity • Social security provide redistribution and insurance • Activation polices moral hazard • The effects of active labour market policies depends on; economic cycle; type of instrument and target group, program length, sequencing and timing; etc. • Social investments crucial, especially in: • Knowledge based societies • People before they become adults • Kids with disadvantaged family backgrounds

  20. Is the Nordic model sustainable? • Maintain high employment rates • Avoid increase in long term unemployment and marginalization • Not new challenges, but changing focus and forms • Other forms of equality: gender, age, persons with handicaps and illness, ethnicity, regional etc. • Social investments more needed than ever

  21. Crisis perspectives Cohort effects Intergenerational effects European polarization Labour market polarization Nordic model here to stay

  22. Thanks for your attention Good luck with the Scottish Model! www.jonkvist.com

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