1 DRAFT and INCOMPLETE

In recent years the Danish labor market has become internationally famous for the so-called flexicurity model. By flexicurity reference is made to flexible hiring and firing rules for employers and a system of income security for workers. Many have taken this as a model conducive to job creation, structural change and growth, and the fact that Denmark has a low unemployment rate by international standards is by some taken as evidence in support of the virtues of this model. The flexicurity model has attracted a lot of attention among policy makers in Europe and abroad, because it suggests that a flexible system of hiring and firing can coexist with a generous benefit system and even produce relative low unemployment numbers. There is no doubt that the flexicurity model has some attractive properties. However, some caution should be taken in interpreting its virtues.1 The flexicurity elements were basically unchanged over several decades and were therefore also in place during the period from the mid-1970s to the early-1990s where Denmark saw double-digit unemployment rates. The main changes which have been made over this period is the introduction of the active orientation of labor market policies during the 1990s including in particular shorter duratio