‘All’s well in Iceland?’ Austerity measures, labour market initiatives, and health and well-being of children

Governmental policies during an economic recession may protect the welfare system or undermine it. In this paper we address the economic crisis in Iceland following the collapse of its three major banks in October 2008. We aim to outline governmental response to the ensuing economic recession with focus on vulnerable groups in times of austerity, in particular the unemployed and children, and use indicators on child health and well-being to gauge policy impact. For the analysis, we use published research, governmental documents, and other relevant material. The post-crisis government faced a huge budget deficit while aiming to keep the social security system in place intact. There is evidence that it was rather successful in doing so, for example through redistribution of tax revenues and labour market initiatives. Despite the crisis, there are indications that the health and well-being of children has not been negatively impacted and has even improved in some aspects, judging by commonly used child health indicators. Concerns about long-term consequences prevail