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

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.

Epidemic–economic complexity of COVID-19 policies across skill groups and geographies

The COVID-19 pandemic has threatened public health and socio-economic activities across societal groups and geographies. We analyse the complex interplay between epidemic and economic factors using a structural panel vector autoregressive (PVAR) approach for Danish municipalities. Findings indicate that the pandemic shock and associated public health interventions led to significant increases in unemployment rates. Wage compensations reduce regional unemployment through both a direct local effect and indirect spatial spillovers. Decomposing the unemployment rate by skill, we find that the response to an increase in wage compensations is only significant for low-skilled persons and that it is larger in urban compared with rural settings. © 2023 Regional Studies Association.