Flexicurity – Labour Market Performance in Denmark

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 were 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.

Flexicurity in Denmark

Arbeitsmarktflexibilisierung, Arbeitsmarktpolitik, Wirtschaftspolitische Wirkungsanalyse, Dänemark, Flexicurity, Labour market flexibility, Labour market policy, Economic policy analysis, Denmark

Business Cycle Dependent Unemployment Insurance

The consequences of business cycle contingencies in unemployment insurance systems are considered in a search-matching model allowing for shifts between “good” and “bad” states of nature. We show that not only is there an insurance argument for such contingencies, but there may also be an incentive argument. Since benefits may be less distortionary in a recession than a boom, it follows that counter-cyclical benefits reduce average distortions compared to state independent benefits. We show that optimal (utilitarian) benefits are counter-cyclical and may reduce the structural (average) unemployment rate, although the variability of unemployment may increase.unemployment benefits, business cycle, insurance, incentives

The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market

Workfare policies are often introduced in labour market policies to improve the trade-off between incentives and insurance as an alternative to benefit reductions. Most of the debate on such policies has focussed on the direct effect of those participating in the scheme, and in particular the possible locking-in effect reducing job search. In a general equilibrium search framework, we show that the effects of workfare policies critically depend on the response of those not in the programme when they take into account that workfare is a condition for remaining eligible for unemployment benefits. This implies that unemployed not yet in workfare may search more for regular jobs, and employed may accept lower wages since the outside option becomes less attractive. Introduction of workfare policies into an unemployment insurance scheme is shown to contribute to a reduction in both open and total unemployment. It is also shown that the direct search effects of workfare policies are a poor indicator of the overall effect workfare policies have on labour market policies.active labour market policy, risk, search, unemployment

Separate representations of target and timing cue locations in the supplementary eye fields

When different stimuli indicate where and when to make an eye movement, the brain areas involved in oculomotor control must selectively plan an eye movement to the stimulus that encodes the target position and also encode the information available from the timing cue. This could pose a challenge to the oculomotor system since the representation of the timing stimulus location in one brain area might be interpreted by downstream neurons as a competing motor plan. Evidence from diverse sources has suggested that the supplementary eye fields (SEF) play an important role in behavioral timing, so we recorded single-unit activity from SEF to characterize how target and timing cues are encoded in this region. Two monkeys performed a variant of the memory-guided saccade task, in which a timing stimulus was presented at a randomly chosen eccentric location. Many spatially tuned SEF neurons encoded only the location of the target and not the timing stimulus, whereas several other SEF neurons encoded the location of the timing stimulus and not the target. The SEF population therefore encoded the location of each stimulus with largely distinct neuronal subpopulations. For comparison, we recorded a small population of lateral intraparietal (LIP) neurons in the same task. We found that most LIP neurons that encoded the location of the target also encoded the location of the timing stimulus after its presentation, but selectively encoded the intended eye movement plan in advance of saccade initiation. These results suggest that SEF, by conditionally encoding the location of instructional stimuli depending on their meaning, can help identify which movement plan represented in other oculomotor structures, such as LIP, should be selected for the next eye movement