Nordic Economic Policy Review : Whither the Nordic Welfare Model?

Is it possible to sustain an ambitious and redistributive Nordic welfare state in a Europe with open borders? Drawing on longitudinal administrative records spanning four decades, we first present discouraging historical evidence showing that labor migrants from low-income source countries tend to have unstable employment careers with marked overrepresentation in welfare programs. This pattern extends to post-accession labor migrants from Eastern Europe, who quickly experience high rates of unemployment. The article discusses possible avenues for making the welfare state "migration robust". We argue that there are alternatives to reclosing borders and/or cutting down welfare state ambitions, and recommend policies based on strengthening of activity requirements in social insurance programs, raising minimum job standards, and substitution of workoriented services for cash-based family allowances. The Nordic Economic Policy Review is published by the Nordic Council of Ministers. This year's issue is part of the Danish presidency programme for the Nordic Council of Ministers in 2015. The review addresses policy issues in a way that is useful for in-formed non-specialists as well as for professional economists. All articles are commissioned from leading professional economists and are subject to peer review prior to publication. The review appears once a year. It is published electronically on the website of the Nordic Council of Ministers: www.norden.org/en. On that website, you can also order paper copies of the Review (enter the name of the Review in the search field, and you will find all the information you need).