Article

Flexicurity: Labour Market Performance in Denmark

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Abstract

Unemployment is at a low and stable level in Denmark. This achievement is often attributed to the so-called flexicurity model combining flexible hiring and firing rules for employers with income security for employees. Whatever virtues this model may have, a low and stable unemployment rate is not automatically among them since the basic flexicurity properties were also in place during the 1970s and 1980s where high and persistent unemployment was prevalent. Labour market performance has changed due to a series of reforms during the 1990s, the main thrust of which was a shift from a passive focus of labour market policies to a more active focus on job search and employment. The policy tightened eligibility for unemployment benefits and their duration as well as introduced workfare elements into unemployment insurance and social policies in general. Thereby, policy makers attempted to strengthen the incentive structure without taking resort to general benefit reductions. We argue that the workfare policies have played an important role running primarily via motivation/threat and wage effects. However, active labour market policies are resource demanding, and although the workfare reforms have improved cost effectiveness, there is still an issue as to whether the resources going into active labour market policies are used efficiently. (JEL codes: J30, J40, J60, H53)

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... Workfare is simply a method for making life on benefits as unattractive as possible (Andersen and Svarer 2007a;Besley and Coate 1992). It is clearly distinct from spending on active labour market policy (ALMP) measures, which refer to expenditures on policies that help or incentivize the unemployed to find jobs, for instance, employment incentives, direct job creation programmes and funding training schemes (Vlandas 2013). ...
... In the beginning of the 1990s, Denmark implemented a series of labour market reforms which denoted a shift from passive to active labour market pol-icies (Andersen and Svarer 2007a). The reforms were legitimized by emphasizing reciprocity between the citizens and society. ...
... As a part of the reform, labour market regulation was dismantled making it easier to "fire and hire", which became the trademark of the Danish model. Because of its combination of flexible regulations with social security, the Danish model was later known as "flexicurity" (Andersen and Svarer 2007a). ...
... The key ingredients are lax employment protection legislation, a relatively generous social safety net, and active labor market policies. It combines employers' demand for flexibility with workers' demand for income security and maintains work incentives via active labor market policies [1]. However, the flexicurity model is no guarantee against a recession, and the critical test is whether the model can cope with large negative shocks, support reallocation of labor, and avoid persistent unemployment. ...
... The recovery has been swifter than in most other countries, and employment is now at a higher level than before the Covid-19 crisis. The Danish flexicurity labor market has received considerable attention in recent years, especially for its ability to make a relatively generous social safety net compatible with a high employment rate [1]. It should be noted that employment rates-for both men and women-are among the highest within the OECD. ...
... The key ingredients are lax employment protection legislation, a relatively generous social safety net, and active labor market policies. This model combines employers' demand for flexibility with workers' demand for income security and maintains work incentives via active labor market policy [1]. However, the flexicurity model is no guarantee against a recession, and the critical test is whether the model can cope with a large negative shock, support reallocation of labor, and avoid persistent unemployment. ...
... The Danish flexicurity labor market has received considerable attention in recent years, especially for its ability to make a relatively generous social safety net compatible with a high employment rate [1]. It should be noted that employment rates-for both men and women-are among the highest within the OECD. ...
... For an average production worker, the replacement rate is less than 50% (see Andersen et al. (2020)). A string of reforms changed labor market policies in the mid-1990s (see Andersen and Svarer (2007)). Roulet (2021) finds a similar impact of job displacement using plant closure as the displacement event. ...
... Passive and active labor market policies. Andersen and Svarer (2007) argue that that active labour programs are key for a high-performing labor market. Card et al. (2018) examine the impact of 207 ALMP studies, and find a long run (2+ years) impact on employment probability of between 5 and 12 percentage points. ...
... For an average production worker, the replacement rate is less than 50% (see Andersen et al. (2020)). A string of reforms changed labor market policies in the mid-1990s (see Andersen and Svarer (2007)). Roulet (2021) finds a similar impact of job displacement using plant closure as the displacement event. ...
... Passive and active labor market policies. Andersen and Svarer (2007) argue that that active labour programs are key for a high-performing labor market. Card et al. (2018) examine the impact of 207 ALMP studies, and find a long run (2+ years) impact on employment probability of between 5 and 12 percentage points. ...
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We document the consequences of losing a job across countries using a harmonized research design. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in-between. Key to these differences is that Southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums accounts for 40% to 95% of within-country wage declines. The use of active labor market policies predicts a significant portion of the crosscountry heterogeneity in earnings losses. JEL Classification: J30, J63, J64
... T he Danish labour market is characterized by limited employment protection, high tax-financed social security and extensive active labour market policies that ensure assistance to the unemployed in finding employment. 1,2 This combination is known as the Danish 'flexicurity' model. 1,3 The political and economic sustainability of this model depends on a high employment rate. ...
... 1,2 This combination is known as the Danish 'flexicurity' model. 1,3 The political and economic sustainability of this model depends on a high employment rate. 4 In Denmark, this is challenged by an ageing population, and by a persistently high proportion of working-age Danes who are outside the labour market. ...
Article
Background In 2013, Denmark implemented a reform that tightened the criteria for disability pension, expanded a subsidized job scheme (‘flexi-job’) and introduced a new vocational rehabilitation scheme. The overall aim of the reform was to keep more persons attached to the labour market. This study investigates the impact of the reform among persons with chronic disease and whether this impact differed across groups defined by labour market affiliation and chronic disease type. Methods The study was conducted as a register-based, nationwide cohort study. The study population included 480 809 persons between 40 and 64 years of age, who suffered from at least one of six chronic diseases. Hazard ratios (HR) and 95% confidence intervals (CI) of being awarded disability pension or flexi-job in the 5 years after vs. the 5 years prior to the reform were estimated. Results Overall, the probability of being awarded disability pension was halved after the reform (HR = 0.49, CI: 0.47–0.50). The impact was largest for persons receiving sickness absence benefits (HR = 0.31, CI: 0.24–0.39) and for persons with functional disorders (HR = 0.38, CI: 0.32–0.44). Also, the impact was larger for persons working in manual jobs than for persons working in non-manual jobs. The probability of being awarded a flexi-job was decreased by one-fourth (HR = 0.76, CI: 0.74–0.79) with the largest impact for high-skilled persons working in non-manual jobs. Conclusion Access to disability pension and flexi-job decreased after the reform. This impact varied according to labour market affiliation and chronic disease type.
... The key ingredients are lax employment protection legislation, a relatively generous social safety net, and active labor market policies. This model combines employers' demand for flexibility with workers' demand for income security, and maintains work incentives via the active labor market policy [1]. However, the flexicurity model is no guarantee against a recession, and the question is whether the model can cope with a large negative shock, remain flexible, and avoid persistent unemployment. ...
... The Danish flexicurity labor market has received considerable attention in recent years, especially for its ability to make a relatively generous social safety net compatible with a high employment rate [1]. The Great Recession brought the model a serious test. ...
... The Danish 'flexicurity' labour market model consists of three main parts: (i) minimal job protection, (ii) generous unemployment benefits, and (iii) extensive use of active labour market policies (Heyes 2011;van Kersbergen and Hemerijck 2012). Accordingly, there is a high level of worker-and job turnover rate, made possible by the lenient hiring and firing legislation (Madsen 2004;Andersen and Svarer 2007). It is especially among skilled and unskilled workers that the employment protection is weak, while employers have less flexibility in dismissing traditional 'white collar' employees (Jensen 2011). ...
... Fourthly, because of cross-national differences in mobility rates. The comparatively high hiring probabilities for people with ill health and high education in Denmark are most likely a result of two important processes: First, a higher worker turnover rate overall in the Danish labour market (Madsen 2004;Andersen and Svarer 2007), and second, a high unemployment risk for people with ill health in Denmark during the recent economic downturn (Heggebø 2015). This means that people with health problems are in the 'pool' of potential candidates for a job opening to a large extent, and this could account for some of the crossnational differences in hiring likelihood. ...
Article
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Previous research has shown that people with health problems often experience disadvantages on the labour market. Can weak employment protection increase employment prospects for people with ill health? In order to investigate this question, the longitudinal part of the European Union Statistics on Income and Living Conditions (EU-SILC) data material is utilised (2008–2011) and generalised least squares regressions are estimated. The research context is set to Scandinavia. Denmark, Norway, and Sweden are similar in many respects, but deviate on one important point: the employment protection legislation is considerably weaker in the Danish ‘flexicurity’ model. The lenient firing regulations could make employers more prone to take the ‘risk’ associated with hiring someone with a health problem, since the costs related to firing him/her are low. The results reveal that people with ill health have somewhat better hiring likelihood in Denmark than in Norway and Sweden. This pattern is, however, only evident among higher educated individuals. Furthermore, descriptive evidence indicates that the ‘flexicurity’ model seems to come at a cost for people with health problems: The employment rates are not high overall, and temporary work contracts are much more widespread in Denmark. Consequently, labour market attachment for people with ill health remains rather ‘loose’ in the Danish ‘flexicurity’ model.
... This cohort study was conducted in Denmark. Danish residents have uniform access to tax-funded health care and are safeguarded economically by the government in case of workforce detachment, sickness, or social issues limiting their labor market contribution [15,16]. Several programs are implemented to help people return to work including vocational rehabilitation programs, job search assistance, counselling, and guidance. ...
Article
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Purpose In 2020, one million women aged < 55 years were diagnosed with breast cancer globally. The impact of breast cancer and its treatments on these women’s ability to work and need for social benefits may differ by social characteristics. We evaluated social benefit use following breast cancer by education and cohabitation. Methods We conducted a nationwide population-based cohort study, including women aged 18–55 years diagnosed with stage I-III breast cancer in Denmark during 2002–2011. Statistics Denmark provided information on cohabitation, education, and social benefit use from 1 year pre-diagnosis to 10 years post-diagnosis. We calculated weekly proportions of self-support, unemployment, disability pension, flexi jobs, and sick leave according to education and cohabitation. Results Of 5345 women, 81.8% were self-supporting, 4.5% received disability pensions, 1.6% had flexi jobs, 3.6% were on sick leave, and 5.5% were unemployed 1 year pre-diagnosis. Ten years post-diagnosis, the proportions were 69.0%, 13.0%, 10.5%, 3.4%, and 2.0% of 3663 survivors. Disability pensions and flexi jobs increased from 12.1 to 26.4% and 2.8 to 13.5% in women with short education, from 4.1 to 12.8% and 1.8 to 12.2% in women with medium education, and from 0.8 to 6.0% and 0.9 to 6.9% in longer educated. Disability pensions increased more in women living alone (7.8 to 19.9%), than in cohabiting women (3.6 to 11.3%). Conclusions Use of social benefits reflecting lost ability to work was highest in less educated women and in women living alone. Implications for Cancer Survivors Awareness of these groups is crucial when tailoring efforts to support work participation in cancer survivors.
... For an average production worker, the replacement rate is less than 50% (see Andersen et al. (2020)). A string of reforms changed labor market policies in the mid-1990s (see Andersen and Svarer (2007)). ...
Article
We document the consequences of losing a job across countries using a harmonized research design applied to seven matched employer-employee datasets. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in between. Key to these differences is that southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums explains a substantial portion of wage losses in all countries. (JEL J31, J63, J64)
... The Danish labor market model, also known as the flexicurity model, favors employers with flexible hiring and firing rules, while it safeguards employees with a generous social system and security net [29]. The Danish state provides substantial subsistence payments, unemployment benefits, and a range of social and health-related benefits. ...
Article
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Purpose Breast cancer treatment is associated with adverse effects, which may delay return-to-work. Single nucleotide polymorphisms (SNPs) may influence the risk and severity of treatment toxicities, which in turn could delay return-to-work. We examined the association of 26 SNPs with return-to-work in premenopausal women with breast cancer. Methods Using Danish registries, we identified premenopausal women diagnosed with non-distant metastatic breast cancer during 2007‒2011, assigned adjuvant combination chemotherapy including cyclophosphamide and docetaxel. We genotyped 26 SNPs in 20 genes ( ABCB1, ABCC2, ABCG2, CYP1A1, CYP1B1, CYP3A, CYP3A4, CYP3A5, GSTP1, SLCO1B1, SLCO1B3, ARHGEF10, EPHA4, EPHA5, EPHA6, EPHA8, ERCC1, ERCC2, FGD4 and TRPV1) using TaqMan assays. We computed the cumulative incidence of return-to-work (defined as 4 consecutive weeks of work) up to 10 years after surgery, treating death and retirement as competing events and fitted cause-specific Cox regression models to estimate crude hazard ratios (HRs) and 95% confidence intervals (CIs) of return-to-work. We also examined stable labor market attachment (defined as 12 consecutive weeks of work). Results We included 1,964 women. No associations were found for 25 SNPs. The cumulative incidence of return-to-work varied by CYP3A5 rs776746 genotype. From 6 months to 10 years after surgery, return-to-work increased from 25 to 94% in wildtypes ( n = 1600), from 17 to 94% in heterozygotes ( n = 249), and from 7 to 82% in homozygotes ( n = 15). The HR showed delayed return-to-work in CYP3A5 rs776746 homozygotes throughout follow-up (0.48, 95% CI 0.26, 0.86), compared with wildtypes. Estimates were similar for stable labor market attachment. Conclusion Overall, the SNPs examined in the study did not influence return-to-work or stable labor market attachment after breast cancer in premenopausal women. Our findings did suggest that the outcomes were delayed in homozygote carriers of CYP3A5 rs776746, though the number of homozygotes was low.
... More details on the Danish labor market can be found inHansen and Tranaes (1999),Andersen and Svarer (2007) andAndersen (2019). ...
Article
Denmark is one of the richest countries in the world and achieves this in combination with low inequality, low unemployment, and high-income security. This performance is often attributed to the Danish labor market model characterized by what has become known as flexicurity. This essay describes and evaluates Danish flexicurity. The Danish experience shows that flexicurity in itself, that is, flexible hiring and firing rules for firms combined with high income security for workers, is insufficient for successful outcomes. The flexicurity policy also needs to include comprehensive active labor market programs (ALMPs) with compulsory participation for recipients of unemployment compensation. Denmark spends more on active labor market programs than any other OECD country. We review theory showing how ALMPs can mitigate adverse selection and moral hazard problems associated with high income security and review empirical evidence on the effectiveness of ALMPs from the ongoing Danish policy evaluation, which includes a systematic use of randomized experiments. We also discuss the aptness of flexicurity to meet challenges from globalization, automation, and immigration and the trade-offs that the United States (or other countries) would face in adopting a flexicurity policy.
... 29 26 As a further illustration, Figures D.1-D.4 in the Appendix show that family formation is most pronounced among the college-educated. 27 Andersen and Svarer (2007 ...
... For an average production worker, the replacement rate is less than 50% (see Andersen et al. (2020)). A string of reforms changed labor market policies in the mid-1990s (see Andersen and Svarer (2007)). ...
Article
Full-text available
We document the consequences of losing a job across countries using a harmonized research design applied to seven matched employer-employee datasets. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in between. Key to these differences is that Southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums explains a substantial portion of wage losses in all countries.
... Furthermore, these countries have traditionally been associated with segmented labour markets, with a large secondary segment characterised by lower salaries and poorer conditions related to job security, working hours and career prospects (Simón et al., 20142014). On the contrary, Denmark, frequently stressed as a good example of flexicurity and less segmented labour market (Andersen & Svarer, 2007), shows the highest job quality. Despite that, the lowest differences between immigrants and natives are observed in the United Kingdom and France, countries with a longer migratory tradition. ...
Article
Using microdata from the European Union Labour Force Survey (EU‐LFS) and aggregate indicators of labour market institutions, this article compares the job quality of native and non‐native workers across European countries and analyses the impact of the institutional settings on the job quality differential between both groups. The LFS is used to measure a job quality index for the period 2005–2017. We find that some immigrant groups fare worse than natives, the contribution of the “composition effect” to explain this differential is large, and the institutional framework affects the immigration gap in job quality. In particular, some labour market institutions (more centralized wage bargaining, stricter employment protection legislation) tend to be detrimental for immigrants relative to natives, while integration policies seem to work well in reducing these differences.
... The differences in transition regimes across the three countries mainly appear in the linkage between the educational system and the labour market. Denmark has a long tradition of apprenticeship in the vocational upper secondary education, and a more liberal employment legislation which intends to promote a high job-tojob mobility and flows in and out of employment and unemployment according to the so-called 'flexicurity model' which combines flexibility on the labour market and income security for the citizen (Andersen & Svarer, 2007). Finland and Sweden have school-based vocational education and more rigid employment protection legislation (Bäckman et al., 2015;Helms Jørgensen et al., 2019). ...
Article
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Previous research suggests that young adults from out-of-home care (OHC) are at high risk of low education and unemployment. However, there are no studies on their risk of long-term NEET (Not in Employment, Education or Training). This study compared the risk of NEET at age 21-23 among OHC youth across Denmark, Finland and Sweden, using register data for an entire birth cohort born in 1987. The Nordic countries share many features, but there are differences in the provision of after-care support and in the linkage between the educational system and the labour market. The results show that about a fourth in Denmark and Sweden and a third in Finland were NEET, suggesting that the welfare systems were not able to compensate for the OHC youth's childhood disadvantages. To a significant extent , the excess risk of NEET was attributed to poor school performance. Implications for research, policy and practice are discussed.
... The case of the Dutch economy-where tax breaks introduced about a decade ago led to a steep increase in solo self-employment without facilitating radically innovative, high-growth entrepreneurship-illustrates that some marginal changes would not be sufficient (Liebregts 2016). Similarly, Denmark's flexicurity model, which combines generous welfare systems with weak job security mandates (see Andersen and Svarer 2007), has also not been particularly successful in boosting high-tech entrepreneurship. ...
Article
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Research into the link between national institutions and entrepreneurship is characterized by three shortcomings: First, clear-cut concepts of institutions are rare. Second, a parsimonious understanding of how a few core institutions influence entrepreneurship is missing. Third, scholars often ignore that incrementally innovative ventures constitute a distinct (and under-researched) type of entrepreneurship next to the (over-researched) form of radically innovative, high-growth or high-tech entrepreneurship. By addressing these three shortcomings, the Varieties-of-Capitalism (VoC) literature can explain how a core group of distinct national institutions facilitate the development of different types of entrepreneurship between countries. In particular, the VoC framework illustrates the comparative institutional advantage that continental European economies offer to incrementally innovative ventures. Applications of the VoC reasoning to entrepreneurship studies would thus allow researchers to, first, perform focused rather than eclectic analyses of institutional influences on entrepreneurship. Second, it would pave the way for research into institutionally induced equifinality. Third, entrepreneurship research could move away from its wishful ideology displaying radically innovative entrepreneurship as the most desirable form of entrepreneurship. As a consequence, policymakers could target entrepreneurial support measures more specifically to their economy’s institutional environment.
... The Danish flexicurity system is a good example. Andersen and Svarer (2007) point out that the relatively low unemployment rate in Denmark since mid-1990 is due to a labor market reform which complements pre-existing low employment protection and generous unemployment benefits with a newly introduced active labor market policy. Caused by this reform, labor is allocated more efficiently through the combination of low employment protection, a suitable safety net (high replacement rates) and adequate activation measures to avoid the loss of job-specific networks and human capital. ...
Article
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Reducing rigidity in labor markets is key to lowering unemployment. Theoretical models suggest that the impact of such reforms depends on the country-specific regulatory framework. We test this hypothesis by estimating the impact of changes in six categories of regulation conditional on the country-specific regulatory environment for 26 OECD countries. We overcome problems of modeling a large set of institutional interdependencies by applying a machine learning type model selection approach. We provide evidence for the existence of higher-order institutional interdependencies. We further document that especially for changes in employment protection and the unemployment benefit system the impact on unemployment is mixed across countries.
... Denmark has been one of the pioneering countries in implementing such policies, and is often deemed a 'success case.' 149 However, the low and stable unemployment rate in Denmark cannot be fully understood without considering its active labour market policies (ALMPs). 150 ALMPs refer to a broad set of policies that aim to help the unemployed return to work: 151 ...
Technical Report
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While the health of Europeans has improved over recent years, differences by gender, birthplace, and/or socioeconomic background persist. This report maps the extent of such health inequalities, its determinants, and costs to society. The findings indicate that differences in health between and within countries are attributable not only to social and health policies, but also depend on economic policy and the social determinants of health. Thus, holistic policy interventions are required to tackle health inequalities.
... Denmark's labor market 'flexicurity' has been acclaimed for its balancing of the needs of employers and employees (European Commission 2007). It has managed to maintain low levels of unemployment and stable (mobile) labor markets (Andersen & Svarer 2007), leading Richard Wilkinson to state; 'If Americans want to live the American Dream, they should go to Denmark' (2011). Kalleberg (2011; calls for a 'new social contract' to alleviate the detrimental impact of polarization and precarity on job quality in the US, emphasizing the importance of the key principles underpinning Danish flexicurity; organizational flexibility, employee security, and collective representation. ...
Article
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Over the last two decades, a range of reports and cross-sectional surveys of European workers have highlighted Denmark as scoring exceptionally, and consistently, well across several dimensions shaping working life, for example, job quality, work-life balance, discretion and learning, and job satisfaction. This is despite a trend of increasing psychosocial risks of work across Europe. Providing a retrospective interpretation of this exceptionalism, the paper draws on data from 40 expert interviews in Denmark to theoretically map the advantageous institutional components shaping working life in Denmark. Aligning the theories of émile Durkheim with the capabilities framework, the analysis highlights the role of interdependent collective agreements, which link macro and microwork contexts and generate resources that augment the experience of balance and control within working life.
... The Danish labour market can be characterised as a 'flexi-curity' system with a high transition between employment and unemployment, but a welfare system with easy access to social benefits. 38 The risk of LTSA may differ according to different labour market systems of different countries and may limit the external validity to countries with a comparable degree of social security as the present study. ...
Article
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Objectives Sickness absence has been used as a central indicator of work disability, but has mainly been examined in single diseases, with limited follow-up time. This study identified the risk of long-term sickness absence (LTSA) of 32 chronic disease groups in the first year after diagnosis and the subsequent years. Setting We identified chronic disease groups prevalent in the work force (26 physical and 6 mental conditions) requiring all levels of care (primary, secondary, tertiary), by national registers of diagnoses from all hospital visits and prescribed medicine in Denmark from 1994 to 2011. Participants A general population sample within the working age range (18–59 years) was drawn by Statistics Denmark. Participants not working before and during the follow-up period were excluded. A total of 102 746 participants were included. Primary and secondary outcome measures HRs of transitions from work to LTSA of each of the chronic conditions were estimated in Cox proportional hazards models for repeated events—distinguishing between risk within the first (<1 year) and subsequent years of diagnosis (≥1 year) and an HR ratio (HRR): HR ≥1 year divided by HR <1 year. Results Almost all the conditions were associated with significantly increased risks of LTSA over time. The risks were generally more increased in men than in women. Three main patterns of LTSA were identified across diseases: strong decreases of LTSA from the first to subsequent years (eg, stroke in men <1 year: HR=7.55, 95% CI 6.45 to 8.85; ≥1 year HR=1.43, 95% CI 1.20 to 1.74; HRR=0.23). Moderate or small decreases in LTSA (HRR between 0.46 and 0.76). No changes (HRR between 0.92 and 0.95) or increases in elevated risks of LTSA over time (HRR between 1.02 and 1.16). Conclusions The 32 chronic diseases were associated with three different risk patterns of LTSA over time. These patterns implicate different strategies for managing work disability over time.
... Decoupling health insurance from employment would increase labor fl exibility and reduce fears of losing adequate health insurance and other important benefi ts that may be attached to employment. In Denmark, generous welfare systems are combined with weak job security mandates, sometimes called "fl exicurity" (Andersen and Svarer 2007 ). This situation can be contrasted with the situation in Sweden, where somebody who voluntarily gives up a tenured position for self-employment may not have any more security than that provided by (means-tested) social welfare. ...
... Thus far, a number of studies were undertaken to depict the adverse and beneficial consequences of flexicurity policies, particularly on productivity and labour market outcomes (unemployment levels). Some of these studies concurred that selected flexicurity measures increased labour and total factor productivity (Laporšek & Dolenc, 2011;Dolenc & Laporšek, 2013;Muffels & Wilthagen, 2013;Rotar, 2017), while others challenge the flexicurity coordinates as being the main contributors to labour market performance (Andersen & Svarer, 2007). Yet others concluded that flexicurity reforms spur job creation and can substantially reduce unemployment in countries where severance payments are initially high (Kettemann et al., 2017). ...
Article
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The research conducted within this paper focuses on the basic coordinates of flexicurity models for ten E.U. Member States in Central and Eastern Europe (C.E.E.), both through the efforts performed nationally within the framework of flexibility and security as well as by the flexicurity states, and effects on workers and the overall economic activity. The aim is to form clusters that will group the analysed countries according to their performances achieved under three basic flexicurity dimensions: external numerical flexibility, income security, and employment security. The results show that the C.E.E. countries have adopted different flexicurity models and associated measures, some focusing on improving flexibility by softening the employment protection legislation or designing flexible working arrangements, while others are concentrating more on employee protection with tight employment regulations (associated with relatively high degrees of income security) with different performances in terms of flexicurity output (states and effects) and labour market outcomes. The impact of various flexicurity measures upon labour productivity in C.E.E. countries is also extremely significant, being largely discussed within the paper.
... It must reduce segmented labor markets and precarious jobs, and promote sustained integration and accumulation of skills' (Commission of the European Communities, 2007). In every EU Member State, due of various political and socio-economic systems, the ways of implementing are different and thus so are the results, however the European Commission set out common principles of Europe- an model of fl exicurity and encourages the Member States to use them 1 . These include among others: 1. Reinforcing the implementation of the EU strategy for growth and jobs and strengthening the European social model. ...
Chapter
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This article attempts to explain the sources and main objectives of the concept of fl exicurity, its implementation in selected EU Member States and the evaluation of the solutions’ effectiveness with particular emphasis on the years of crisis, i.e. 2007-2013. The solutions proposed by the model of fl exible employment and social security seem interesting, especially in times of crisis and economic slowdown.
... Furthermore, to receive unemployment benefits the participant had to be actively seeking a new job, that is, being available for the labor market (the so-called ''right and duty principle''). 32 If a full-time employed participant had quit the job him/herself, he or she would not be able to collect unemployment benefits until after a mandatory waiting period of 3 weeks. Still, in some cases, this waiting period was not applied, for example, if the job has been quit due to health problems. ...
Article
Objectives: To investigate the association between workplace bullying and change of job/unemployment, and to investigate whether psychological stress reactions constitute a potential pathway linking workplace bullying and change of job/unemployment. Methods: We used questionnaire data on workplace bullying and psychological stress reactions and register data on change of job/unemployment. We applied a multiple pathway approach to estimate the proportion of the association between workplace bullying and subsequent change of job/unemployment that was potentially mediated by psychological stress reactions. Results: Workplace bullying was associated with risk of change of job (odds ratio [OR] = 1.35; 95% confidence interval [CI]: 1.06-1.72; 24% potentially mediated by psychological stress reactions) and unemployment (OR = 4.90; 95% CI: 3.18-7.55; 19% potentially mediated by psychological stress reactions). Conclusion: Workplace bullying has important consequences for labor market outcomes. Psychological stress reactions may play a vital role in this process.
... Due to stringent EPL rules, it may be more expensive to hire and retain older workers. In the face of generous employment benefits, "insider" older workers may avoid changing employers, with the consequence Andersen and Svarer (2007). ...
Article
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In the past decade, European governments have implemented activating policy reforms to maximize older workers’ employment and employability, representing a paradigmatic change in approaches to work and retirement. This study isolates the factors that explain the relative success and failure of competitive frames that are either in favor of or against activating policies in European news coverage, by applying time-series analysis (ordinary least squares with panel-corrected standard errors) to monthly aggregated news coverage in the Netherlands, the United Kingdom, Denmark, and Spain over the timespan 2006–2013. The results show that pro-activating and counteractivating frames generally coincide in competitive framing environments. The pro-activating frame proliferated in times of high employment protection, whereas the counteractivating frame prevailed stronger in conservative compared with progressive newspapers, and gained momentum during the aftermath of the financial crisis and in times governments on the economic left were in power. The study advances knowledge of competitive issue framing by demonstrating how the economic, policy, and political context matters for the emergence and evolvement of competing frames. In addition, the findings contribute to the understanding of the factors that contribute to news representations that promote active aging in European news, which may foster support for policy reforms that sustain older workers’ employability.
... The social safety net served to protect incomes but not to bring the unemployed back into employment, which had dramatic consequences for public finances. The model was implementated in 1998 together with the third facet-active labour market policies, which has a clear focus on job search and employment (Andersen and Svarer 2007b). ...
... Renegotiations in January 1989 marked a pivotal change in the manufacturing sector, with sector-specific negotiations between DI (a DA member organization that organizes firms in the manufacturing sector) and CO-metal (a bargaining conglomerate representing unions organizing workers employed in DI firms). These renegotiations shifted a substantial number of wage negotiations to the local level and substantially increased the scope of firm-level wage bargaining (Andersen and Svarer 2007). Although this decentralization process has affected all sectors of the Danish economy in recent decades, both unions and employer organizations in the manufacturing sector initiated this process in 1989. ...
Article
This paper uses administrative data to study the relationship between the decentralization of wage bargaining systems and the costs of worker displacement. Specifically, the paper exploits a major reform of the wage bargaining system in the Danish manufacturing sector, a reform that changed the wage-setting process from a highly centralized bargaining system at the national level to a decentralized system with a strong emphasis on firm-level wage bargaining. The results show that under the centralized wage bargaining system, displaced workers’ income losses were small, whereas under the decentralized wage bargaining system, these income losses increased substantially, particularly because displaced workers experienced worse wage growth under the decentralized system. The effect persists after controlling for a variety of macroeconomic indicators, and displaced workers’ income losses did not increase in sectors that were not affected by a comparable change in the wage bargaining system. (JEL: J01, J63, J65)
... Decoupling health insurance from employment would increase labor fl exibility and reduce fears of losing adequate health insurance and other important benefi ts that may be attached to employment. In Denmark, generous welfare systems are combined with weak job security mandates, sometimes called "fl exicurity" (Andersen and Svarer 2007 ). This situation can be contrasted with the situation in Sweden, where somebody who voluntarily gives up a tenured position for self-employment may not have any more security than that provided by (means-tested) social welfare. ...
Chapter
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Innovation is increasingly considered the key to elevating prosperity and securing sustainable long-term growth. The last few decades have also witnessed a refi nement of previous growth models to include investments in education by individuals and R&D by fi rms. Better educated individuals and increased expenditure on R&D are shown to result in increased innovation and accelerated growth in endogenous growth models. This fi nding has spurred policy makers, most recently the OECD, the European commission, and other organizations, to design innovation strategies to meet future growth and welfare challenges. Such strategies have also trickled down to the country level.
... Decoupling health insurance from employment would increase labor flexibility and reduce fears of losing adequate health insurance and other important benefits that may be attached to employment. In Denmark, generous welfare systems are combined with weak job security mandates, sometimes called "flexicurity" (Andersen and Svarer 2007). This situation can be contrasted with the situation in Sweden, where somebody who voluntarily gives up a tenured position for self-employment may not have any more security than that provided by (means-tested) social welfare. ...
Chapter
This paper examines policy measures that foster the creation of innovations with high inherent potential and that simultaneously provide the right incentives for individuals to create and expand firms that disseminate such innovations in the form of highly valued products. In so doing, we suggest an innovation policy framework based on two pillars: (i) the accumulation, investment, and upgrading of knowledge and (ii) the implementation of mechanisms that enable knowledge to be exploited such that growth and societal prosperity are encouraged. Knowledge is a necessary but far from sufficient condition for growth. To secure industrial dynamics and growth in the long term, institutions must be designed both to encourage sophisticated knowledge investments and to stimulate the creation, diffusion and productive use of knowledge in all sectors of the economy. We argue that the latter area has been overlooked in the policy discussion and that a coherent innovation policy framework must include tax policy, labor market regulation, savings channeling, competition policy, housing market regulation, and infrastructure to foster growth and future prosperity.
... Denmark is often highlighted as the prime example of a particular mix of a flexible labour market with a generous social security system. However, Andersen and Svarer (2007) have noted that, even here, staying out of the labour force for more than a year decreases men's and women's chances in the job market. This leads us to believe that in a situation where the interplay between generations, societal and familial, has been seemingly solved gender issues are irrelevant. ...
Chapter
We start by comparing the childcare systems in the 11 European cities, looking particularly at whether the childcare provision in these cities follows national provision levels or not. We then focus on analyzing the relationships between local and national childcare policies in four European cities: Bologna (Italy) and Terrassa (Spain) from Southern Europe, and Jyväskylä (Finland) and Aalborg (Denmark) from the Nordic countries. The availability and use of childcare services are analyzed, as are other factors influencing the possibilities and obstacles of labour market participation for mothers with young children. The aim of this analysis is to demonstrate the significance of local welfare systems in their socio-cultural context and to understand the scope that local authorities have to draft local policies and thus to divert from national policy definitions. Local policy making also brings rigid welfare regime categories into question.
... Während Länder wie Dänemark, Schweden oder die Niederlande alsbald arbeitsmarktpolitische Instrumente gefunden haben, um -auch für die Geringqualifizierten -zur Vollbeschäftigung zurückzukehren (vgl. beispielsweise Andersen und Svarer (2007) für Dänemark und Nickell und van Ours (2000) für die Niederlande), ist Deutschland mit den Hartz-Gesetzen vergleichsweise spät auf diese Spur eingebogen. ...
... Denmark and other countries studied in prior literature, in particular the United States, differ in their judicial and labor market institutions. But the paper's findings of significant impacts of displacement on crime in a country with 6 relatively high unemployment benefits (Andersen & Svarer 2007) and lower crime rates (Lavrsen & Pedersen 2013) suggest that the paper's results are a lower bound of the impact of job displacement on crime. Finally, the paper presents novel results that document costs of incarceration above and beyond the direct costs of incarceration and parole supervision. ...
... National governments may reduce their efforts and costs to endow local employment offices. Yet, investments into job market matching, active policies, and incentivization can be highly effective, as is visible from country experiences (Andersen and Svarer 2007). 22 A strategy to reduce moral hazard problems is to implement a system such as the IV system described in Section 3. Here, an unemployment-producing policy may trigger transfers, but on a temporary basis only. ...
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A dolgozat öt nagyobb fejezetből áll, amelyek a közösségi jogalkotással, a magyar jogharmonizációval, az uniós szakpolitikával, valamint a magyar foglalkoztatási jogviszonyok rendszerével foglalkoznak.
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Technical Report
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This report presents the results of the analysis of case studies on how ICT-enabled social innovations promoting social investment can contribute to the modernisation of social protection systems in the EU. The case studies are drawn from 14 different Member States and address diverse social services and policy domains. Evidence from the analysis points out to the strong potential of using new approaches based on ICT-enabled social innovation to support public authorities, at various governance levels, in their efforts to improve the effectiveness and impact of social services delivery mechanisms and outreach. The analysis makes a first attempt to assess the relationship between different typologies of ICT-enabled social innovation and the broader social protection system in which they are embedded in. The results of the cross-analysis of case studies allowed defining a set of policy implications that can help policy makers to drive social change. Among many, two in particular might be considered especially relevant in order to take full advantage of ICT-enabled social innovation potential: the simplification of procedures through an open-government approach and the use of European Structural and Investment Funds to further finance ICT-based developments in the social sector.
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Zur Vereinbarkeit von flexiblen Arbeitsmärkten und sozialer Sicherheit am Beispiel der Bundesrepublik Deutschland The compatibility of flexible labor markets and social security in the Federal Republic of Germany The subject of this work is the question as to how flexible labor markets and social security in Germany can be reconciled and how the situation could be improved. The developments on the labor market show that flexibility requirements have increased significantly in the past and will continue to grow in the future. For this reason, the legally comprehensively regulated normal employment relationship in the Federal Republic is also supplemented by a growing number of flexible employment relationships, which are summarized as atypical employment forms. However, for the affected people, the German system of social protection through the conservative welfare state logic has a considerable disadvantage. They are either completely excluded from certain areas of social insurance, or they can only make small claims. Therefore, a not insignificant number of atypical workers is threatened by precarity. For the Federal Republic of Germany it can thus be stated that flexibility and social security can only be inadequately reconciled. The starting point for possible reform approaches was the analysis of the flexicurity strategy of Denmark and the Netherlands, which, unlike Germany, is seen as successful in its labor market policy. On the basis of the same welfare state logic, measures for the Federal Republic are conceivable according to those in the Netherlands - comprehensive possibilities of internal flexibility through appropriate employees' rights and slight relaxation of protection against dismissal while at the same time extending social protection to a basic system of insurance. The Danish combination of the Golden Triangle, which is characterized by a low degree of protection against dismissal, a generous universal social security network and active labor market policy, offers, on the other hand, priority points for the development of further training measures and the cooperation of supervisors and the unemployed within the framework of the employment agencies. Both the Netherlands and Denmark pursue the objective of avoiding the precariousness of atypical employment; this aspect should also gain importance in Germany. The starting points for German reforms can thus be summed up as follows: to expand the possibilities of internal flexibility, to provide better protection for atypical workers either by transitioning to basic security or through better integration into the social security systems as well as the promotion of qualification measures, i.a. within the framework of active labor market policy. The flexicurity concept is not a guarantee for overcoming problems on the labor market. In Denmark and the Netherlands, too, there are unemployed, precarious employment and socially disadvantaged groups, despite flexicurity. The long-term effects of the flexicurity policy are still unclear, in particular the high costs of social security could become a problem in the future. Nevertheless, the approach of providing a counterbalance to the increased flexibility with better social security seems to be sensible and
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Η μελέτη επιχειρεί να διερευνήσει την εφαρμογή της ευελισφάλειας ως εργαλείο πολιτικής της αγοράς εργασίας την περίοδο της κρίσης του 2008 και της συνακόλουθης και παρατεταμένης ύφεσης στην Ευρωπαϊκή Ένωση. Μελετά τις βασικές διαστάσεις της έννοιας της, όπως αυτή αναπτύσσεται στο ενωσιακό θεματολόγιο, εξετάζει τις παρεμβάσεις στις αγορές εργασίας και τις υιοθετούμενες πολιτικές απασχόλησης στη Δανία, τη Γερμανία και την Ελλάδα και ερμηνεύει τα αποτελέσματα προσέγγισης /απόκλισης από τις αρχές της ευελισφάλειας, υπό το φως των ιδιαίτερων συνθηκών των εθνικών αγορών εργασίας και των πολιτικών λιτότητας που αποτελούν κοινό τόπο στον ευρωπαϊκό χώρο.
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This paper has been written in preparation of a research project funded by the European Commission (on the Feasibility and Added Value of a European Unemployment Benefit Scheme, contract VC/2015/0006). This paper adds information and detailed analysis to the following deliverable of that research project: Institutional Moral Hazard in the Multi-tiered Regulation of Unemployment and Social Assistance Benefits and Activation-A summary of eight country case studies; but it was not a deliverable. We use the concept 'institutional moral hazard' to analyse intergovernmental relations within multi-tiered welfare states, specifically in the domain of unemployment-related benefits and related activation policies (the 'regulation of unemployment'). This paper is one of eight separate case studies, it focuses on Denmark. There are two principal actors in the Danish regulation of unemployment: the central government and municipalities, unemployment insurance funds and regional governments have a less important role. Concern for institutional moral hazard has led to several reforms of the municipal activation system, resulting in increasingly detailed monitoring and a complicated financing method. The trade-off between the complexity of central controls and the need for local flexibility is a source of ongoing reform efforts.
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The paper analyses the relationship of tax compliance costs and business strategy. Due to instruments, like information technology, simplified cash accounting or outsourcing compliance activities to tax advisers, private businesses have a set of strategies to optimize their tax compliance cost burden. Under the assumption of rational choice a private business should choose a cost-optimal administration strategy. In spite of that we find empirical evidence for small German businesses using only insufficiently the support of external tax advisers. Therefore, a considerable number of small businesses in Germany could reduce their compliance cost burden by a higher degree of outsourcing tax processes. In contrast, we find no significant evidence for a cost reduction by an electronic data interchange with the tax and social insurance authorities or by a simplified cash accounting method for tax purposes. --
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The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
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The paper investigates the nexus between labor and financial markets, focusing on the interaction between labor union behavior in setting wages, firms' investment strategy and asset prices. The way unions set wage claims after observing firm's financial performance increases the volatility of firms' returns and the riskiness of corporate ownership. To remunerate this higher volatility and stronger risk, firms' equities have to grant high return. This mechanism is able to offer an explanation of for the "equity puzzle", that is it can explain the difference between equity returns and the risk free rate. It is a welcome result that the simulated excess return is about the empirical estimate and this result is obtained with a logarithmic specification of the shareholders preferences.
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Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
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The paper analyzes 3 main trends: (t1) The economic development in the Muslim world is slower than in the rest of the world. (t2) The world grows increasingly democratic due to rising incomes, but this trend does not affect the Muslim world. (t3) The world grows increasingly secular due to rising incomes, but this trend is much weaker in the Muslim world. The difference in (t1) is smaller than necessary to explain (t2) and (t3). It is demon-strated that the data contains two economic convergence clubs: The Western club and the Arab one. The non Arab Muslim countries follow the path of other non-Western countries, though at a lower level. Further, it is demonstrated that Muslims deviate as to religiosity, family life values and as to the preference for religion in politics.
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Sanctions or punitive benefits reductions are increasingly used as a tool to enforce compliance of unemployment insurance claimants with search requirements. This article analyses sanctions using a unique administrative data set of individuals who started collecting unemployment insurance in the Netherlands in 1992. After correction for selectivity in the imposition of sanctions, we find that sanctions substantially raise individual re-employment rates. Copyright 2005 Royal Economic Society.
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This article focuses on unemployed individuals' reaction to compulsory labour market programmes prior to participation. In Denmark, after having received UI benefits for a given period of time, continued benefits are made conditional on participation in a labour market programme. I estimate individuals' reaction to compulsory programmes using legislative changes in the duration of benefits period as identification. I find that compulsory programmes do indeed motivate individuals to find employment prior to participation. The effect is large and is even comparable in size to the effect of benefits exhaustion found in studies of American UI systems. Copyright 2006 The Author. Journal compilation Royal Economic Society 2006.
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This study analyzes the effects of right-wing extremism on the well-being of immigrants based on data from the German Socio-Economic Panel (SOEP) for the years 1984 to 2006 merged with state-level information on election outcomes. The results show that the life satisfaction of immigrants is significantly reduced if right-wing extremism in the native population increases. Moreover ; the life satisfaction of highly educated immigrants is affected more strongly than that of low-skilled immigrants. This supports the view that policies aimed at making immigration more attractive to the high-skilled have to include measures that reduce xenophobic attitudes in the native population. --
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The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
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This paper examines whether subsidized jobs have contributed to employment in subsidized firms or have merely substituted for non-subsidized ones. The data-set is an unbalanced panel of some 31,000 firms that are followed annually between 1995 and 2002. The analysis is based on difference-in-differences, which is adjusted by regression and matching methods. The results indicate that wage subsidies stimulate employment, and that the magnitude of the effect is as aimed. I also found that subsidies have no sizeable effects on non-subsidized firms of the industry or the geographical area in question. Copyright (c) The London School of Economics and Political Science 2006.
Article
The paper analyses the relationship of tax compliance costs and business strategy. Due to instruments, like information technology, simplified cash accounting or outsourcing compliance activities to tax advisers, private businesses have a set of strategies to optimize their tax compliance cost burden. Under the assumption of rational choice a private business should choose a cost-optimal administration strategy. In spite of that we find empirical evidence for small German businesses using only insufficiently the support of external tax advisers. Therefore, a considerable number of small businesses in Germany could reduce their compliance cost burden by a higher degree of outsourcing tax processes. In contrast, we find no significant evidence for a cost reduction by an electronic data interchange with the tax and social insurance authorities or by a simplified cash accounting method for tax purposes. --
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Economic literature often offers conflicting views on the likely efficiency effects of information exchanges, communication between firms, and market transparency. On the one hand, it is argued that increased information dissemination improves firm planning to the benefit of society (including buyers) and allows potential buyers to make correct decisions given their preferences. On the other hand, economic literature also shows that increased information dissemination can raise prices through tacit or explicit collusion to the benefit of firms but at the expense of society at large. This chapter provides a general analytical framework to reconcile these views and presents some basic conclusions for antitrust practice. In addition, the chapter reviews cases from both sides of the Atlantic where informational issues have played a significant role.
Evaluation of a Danish Experiments of Early Measures for Unemployed
Rosholm (2007). " Evaluation of a Danish Experiments of Early Measures for Unemployed ", Draft.