Denmark as laboratory for welfare studies


SFI has a new Managing Director of Research: Professor Torben Tranæs. Among the many items on his agenda is further collaboration between SFI and relevant research environments outside of Denmark. Here, Prof. Tranæs presents his thoughts on why the Danish welfare state may be an interesting research object for non-Danish researchers.

In the beginning of May, Professor Torben Tranæs took office as new Managing Director of Research at SFI. Prof. Tranæs’ career as a professor of economics includes a broad series of international research collaborations, including more than ten years as Research Fellow at IZA and CESifo. In his conversations and collaborations with researchers from other countries, Prof. Tranæs has come to realize, that the Danish welfare state is actually a unique and interesting research object.

“The Danish Government spends enormous amounts on public welfare programmes and we have a lot of public and private welfare institutions and NGOs. Public welfare services have a significant and daily impact on the lives of Danes. In some ways, you can see Denmark as a big laboratory for the extended welfare state,” the new Managing Director of Research explained.

A lot of freedom

Furthermore, while it may not come as a big surprise that, with high taxes and a large public sector, Denmark has a lot of social welfare initiatives and services that can be studied, there is another significant feature which often surprises non-Danish researchers.

“In spite of the large public sector and strong public governance, a lot of key elements have a more or less voluntary basis and are based on civil agreements. Unemployment insurance is voluntary, there are no laws on minimum wage, we have a large number of Free Schools where parents or others can establish their own schools and get federal support with very few conditions, there is almost no red tape when setting up a limited company, etc. So, even though there is a lot of central government and extensive economic redistribution through taxes in Denmark, it is also a very liberal society with a lot of individual and economic freedom. This surprises a lot of my international colleagues – especially from the United States,” Prof. Tranæs pointed out.

Actually, in the recent Index of Economic Freedom from the Heritage Foundation, Denmark comes in at 11th place in the world – just ahead of the United States at 12th place.

Trust and data

However, while this Danish, quite liberal version of the extended welfare state appears to perform rather well on various indicators, there is no solid answer to “why” it works.

“Danes have a high level of trust – trust in government, in other people, in institutions – compared to other countries, and we assume that this may be part of the explanation. But on a more detailed level, we have very limited knowledge. This is very important to examine further,” said Prof. Tranæs.

And it is possible to make very detailed studies in Denmark. The Danish Civil Registration System provides enormous amounts of data at personal level, which makes the possible analyses almost endless:

“We have very good data in Denmark. This makes it possible to study Danish society in detail, unlike almost anywhere in the world,” Prof. Tranæs emphasized.

In order to get access to Danish data, international researchers must corporate with a Danish research institution. SFI has collaborations with a number of international researchers on specific research projects and the SFI Research Fellow programme.

For further information about Torben Tranæs, please read here.

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