In-Work Benefits and the Nordic Model

Ann-Sofie Kolm and Mirco Tonin

No 7084, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Welfare benefits in the Nordic countries are often tied to employment. We argue that this is one of the factors behind the success of the Nordic model, where a comprehensive welfare state is associated with high employment. In a general equilibrium setting, the underlining mechanism works through wage moderation and job creation. The benefits make it more important to hold a job, thus lower wages will be accepted, and more jobs created. Moreover, we show that the incentive to acquire higher education improves, further boosting employment in the long run. These positive effects help counteracting the negative impact of taxation.

Keywords: education; unemployment; wage adjustment; in-work benefits; Nordic model; skill formation; earnings (search for similar items in EconPapers)
JEL-codes: H24 J21 J24 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-12
New Economics Papers: this item is included in nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published as 'Benefits Conditional on Work and the Nordic Model' in: Journal of Public Economics, 2015, 127, 115–126

Downloads: (external link)
https://docs.iza.org/dp7084.pdf (application/pdf)

Related works:
Working Paper: In-Work Benefits and the Nordic Model (2013)
Working Paper: In-Work Benefits and the Nordic Model (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp7084

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().