Reforming the Nordic Model: A study of labor market policies in social-democratic welfare state regime 1980-2015

Sammanfattning: This paper focuses on labor market policies across countries belonging to the social-democratic welfare state regime. Since 1980 Denmark, Finland, Norway and Sweden have undergone a number of reforms and modifications within labor market, which identify the shift from traditional politics of expansion towards what many refer to as welfare retrenchment or restructuring. This paper attempts to observe how the Nordic states have reformed their labor market policies and to understand to what extent the partisan shade of government can explain their reform activity. In order to assess the dynamics of labor market policies across the social-democratic welfare regime, the paper utilizes the concept of path dependency, power resource theory, Nixon-goes-to-China argument and insider-outsider theory. The results of the study show that labor market policies across Scandinavian states have undergone a number of changes: the provision of unemployment insurance has decreased, while the expenditure on employment incentives has increased in various degrees, depending on the analyzed country. The paper argues that the labor market reform activity which has taken place in countries belonging to social-democratic welfare regime is to be explained by parties’ vote-seeking strategy, rather than ideological preferences, pursued by parties. Furthermore, such reforms are uncovered by external factors, such as economic constraints and unemployment, which stimulate insider-outsider preferences dilemma, and thus push parties to undertake specific measures.