Reintegration: Public or Private Responsibility? Consequences of Dutch and Danish Policies toward Work-Disabled Persons

Abstract

The Scandinavian welfare states are known for their universal social security coverage and high labor-market participation rates for all groups in society. The institutional setup in continental European welfare states, on the other hand, is said to foster a divide between employed persons and persons outside the labor market. In the area of disability policies, the Netherlands and Denmark illustrate this distinction. In the Netherlands, strong ties exist between the employer and the sick-listed worker, both because of solid job-protection legislation and because the financing of sickness and disability benefits is closely linked to the individual employer. In contrast, employer responsibility is limited in Denmark, where an extensive responsibility rests with public authorities. The author investigates the consequences of these differences using panel data on Dutch and Danish long-term sick-listed workers. The findings show that the strong ties in the Netherlands between employers and sick-listed workers enhance labor-market reintegration of long-term sick-listed workers. A significant drawback of the Dutch policy, however, is that employers refrain from employing persons with a high risk of falling ill. As a result, Dutch disability policy leads to a bigger insider—outsider divide than Danish policy.