Abstract
The Danish model won fame for its performance during the 1990s and the beginning of the 2000-years and took a position as a model for the European Employment Strategy and a much cited example of a real life flexicurity model.Like most other European countries Denmark has now fallen into a deep economic crisis. This has created debates about the ability of the Danish model to sustain external chocks. Some have further argued that Danish employment will be more vulnerable to economic downturns due to the low level of employment protection legislation (EPL). These issues are in the focus of the present article, which describes the reactions of the Danish employment system to the economic crisis and the relationship between the political responses to the crisis and some main institutional characteristics of the Danish labour market model.JEL classificationE32 - Business Fluctuations; Cycles, J68 - Public Policy, J08 - Labour Economics Policies
Highlights
Denmark received considerable international attention during the decade before the economic crisis
The Danish development of the welfare state and labour market was seen as a successful hybrid between the flexible labour markets in the liberal welfare states characterised by high numerical flexibility and the Scandinavian welfare regimes of generous social security
The hybrid model seemingly managed to reconcile the dynamic forces of the free market economy with the social security of the Scandinavian welfare states (Madsen, 2006)
Summary
Denmark received considerable international attention during the decade before the economic crisis. Both these observations are consistent with the hypothesis that the high level of external numerical flexibility of the Danish labour market – corresponding to a relatively low level of EPL – will lead to more volatile changes in unemployment and employment over the business cycle.
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