Graph of the day. The employment rate in Denmark and Sweden

Denmark is famous for its ‘flexicurity’ labour market – and its rigid money. Firing people is easy in Denmark – but the unemployed do not only get financial support (recently cut, by the way) but also some training and education. Does this work in times of crisis? No. As, alas, Denmark has pegged its currency to the Euro despite having by far the highest price level of the European Union (which does not show any sign of decreasing). Sweden has a rather flexible labour market too. Lots of temporary jobs, over there. But unlike Denmark it also has ‘flexible’ money and monetary policies. Even ‘market monetarists’, which at this moment favor the monetary financing of about everything (except the government?),  laud Swedish monetary policies (negative interest rates, depreciation of the currency). And the graph shows that in times of crisis macro trumps micro: there clearly is ‘A Great Danish Slump’. Even micro-economic analysis by the way shows that active micro labour market policies do not work that well: better educated labour crowds out less educated labour in Denmark, as this study shows.

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