Why Activation? An essay on Active Labour Market Policy in Denmark

Denmark is among the countries of the world that spend the most on Active Labour Market Policy. In 2012 Denmark used DKK 16 billion (EUR 2.15 billion) for this purpose, almost three times as much as the average OECD country, and double that spent by Germany. Is such great expenditure on labour market activation justified? Are the effects commensurate with the cost? These issues are discussed in this paper, which also includes a discussion of the aim of activation. Is its purpose simply to promote employment, or do social and income distribution considerations also play a role?