By Adina Serbanescu
Abstract
This paper evaluates the Danish active labor market program (ALMP) model to determine its effectiveness at reducing the natural rate of unemployment. Drawing on experimental and non-experimental studies, this paper presents evidence of several positive and negative effects of the current scheme, which makes unemployment and social assistance benefits conditional upon ALMP participation. Grounded in natural unemployment rate theory, it finds that Danish ALMPs have an overall positive effect on the natural unemployment rate, largely due to the threat of activation on frictional unemployment. This has implications for recent changes to the unemployment benefit scheme, which has ruptured the “right and duty” principle underpinning the dominant model of flexicurity.
Adina Serbanescu holds a master of public policy (MPP) from the School of Public Policy and Governance, University of Toronto. She was a co-editor of the Public Policy and Governance Review, a graduate student policy journal and blog, in 2012-2013. Adina has previously worked in the Ontario Public Service.