Crisis and the welfare state: the role of public employment services for job placement and the Danish flexicurity system during COVID-19

Abstract

Denmark is a Nordic welfare state with local government autonomy in public service provision related to workfare policies. We use a policy experiment that re-opened on-site public employment services after the first COVID-19 lockdown in a spatially staggered manner to provide evidence on the effect of public employment services on job placement during a crisis. Early re-opening of on-site public employment services is associated with a better local labour market performance. It particularly benefits low-skilled unemployed and rural areas with specific sector mixes and demographic structures, why workfare-oriented welfare state arrangements remain important to counter social and regional imbalances.