Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69404
Authors: 
Kolm, Ann-Sofie
Tonin, Mirco
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 7084
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.
Subjects: 
Nordic model
in-work benefits
wage adjustment
unemployment
education
skill formation
earnings
JEL: 
H24
J21
J24
Document Type: 
Working Paper

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