ABSTRACT
This chapter presents a critical analysis of the factors behind the changes, with emphasis on the knowledge that can be gained from recent evaluations of the reforms made to Danish labour market policy since 1994. The success of the Danish model of flexicurity thus points to a third way between the flexibility often ascribed to a liberal market economy and the social safety nets of the traditional Scandinavian welfare state. The changes in the profile of Danish labour market policy since the mid-1990s have placed Denmark in the upper range of Organization for Economic Cooperation and Development countries in terms of expenditure on both active and passive labour market policy measures. The highly dynamic nature of the labour market, involving a large number of shifts between jobs, also implies a continuous testing of the productivity of employees. The high replacement rates in the Danish unemployment benefit system increase the risk of financial disincentives, especially for low-income groups.
