Low-Wage Work in Denmark

"The Russell Sage series on job quality is a very welcome contribution in a world where employment seems to be polarizing. Low-Wage Work in Denmark is especially noteworthy because the Danish case is internationally regarded as a model to follow if we desire flexible labor markets without social exclusion. And, as Niels Westergaard-Nielsen and his colleagues show in their laudably balanced and empirically rich analyses, the model does seem to work. Danish low-wage workers clearly fare much better than elsewhere. This excellent study explains why. It is a must-read for policymakers and analysts; an indispensable resource for social scientists."
-GØSTA ESPING-ANDERSEN, professor of sociology, Universitat Pompeu Fabra, Barcelona

"All nations struggle with the problem of unskilled working-age people. 'Flexicurity' -few labor restrictions and a generous safety net-is Denmark's unique arrangement. There, the unskilled are not poor, move rapidly out of low-skill jobs, and are treated with dignity-all huge accomplishments. But the system also creates problems-high tax rates, welfare dependency, and costs, and the effective exclusion of immigrants. Low-Wage Work in Denmark, a volume in the Russell Sage series of systematic, cross- country analyses of low-wage work, gives us a careful and in-depth assessment-both blemishes and beauty-of this small country's approach."
-ROBERT HAVEMAN, professor emeritus of public affairs and economics, Robert M. La Follette School of Public Affairs, University of Wisconsin-Madison

"For millions of employed Americans, 'work doesn't pay,' occupational and social benefits are meager, and opportunities for shifting into substantially higher-paying work are scarce. American analysts often view low-paid work as the lamentable but inevitable byproduct of a flexible labor market, technological advancement, and the global economy. This first-rate volume will challenge that sense of resignation, as it vividly demonstrates that a multitude of institutional reforms could both reduce the incidence of low-wage work and lessen its problematic consequences. The Danish flexicurity model, which melds flexibility for employers with economic security for workers, operates alongside impressive economic outcomes, including comparatively high labor force participation, low unemployment, and high mobility out of low-wage work. This accessible collection outlines an institutional blueprint that could help structure an overhaul of low-wage work in the United States should the political opportunity arise."
-JANET GORNICK, professor, political science and sociology, City University of New York, and director, Luxembourg Income Study

The Danish economy offers a dose of American labor market flexibility inside a European welfare state. The Danish government allows employers a relatively high level of freedom to dismiss workers, but also provides generous unemployment insurance. Widespread union coverage and an active system of collective bargaining help regulate working conditions in the absence of strong government regulation. Denmark’s rate of low-wage work—8.5 percent—is the lowest of the five countries under analysis. In Low-Wage Work in Denmark, a team of Danish researchers combines comprehensive national registry data with detailed case studies of five industries to explore why low-end jobs are so different in Denmark. Some jobs that are low-paying in the United States, including hotel maids and meat processors, though still demanding, are much more highly compensated in Denmark. And Danes, unlike American workers, do not stay in low-wage jobs for long. Many go on to higher paying jobs, while a significant minority ends up relying temporarily on income support and benefits sustained by one of the highest tax rates in the world.  Low-Wage Work in Denmark provides an insightful look at the particularities of the Danish labor market and the lessons it holds for both the United States and the rest of Europe.

NIELS WESTERGAARD-NIELSEN is professor of economics at the School of Business, University of Aarhus.

CONTRIBUTORS: Anne-Mette Sonne, Nuka Buck, Tor Eriksson, Lars Esbjerg, Jacob K. Eskildsen, Klaus K. Grunert, Jingkun Li, Ann-Kristina Lokke Nielsen, Robert Solow, Ole Henning Sorensen.

A Volume in the RSF Case Studies of Job Quality in Advanced Economies