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The Nordic countries stand out in international comparisons for having both high living standards and low inequality. The welfare state and public sectors are large and the tax burden is high. How have these countries managed to achieve such favorable economic performance? 

Economist Torben M. Andersen shows how the Nordic model rests on two pillars: the social safety net, which offers income compensation to the majority of those unable to support themselves, and the provision of services like education, childcare, and healthcare to all. The Nordic model can be characterized as one of employment, since its financial viability rests on a high labor participation rate with few working poor. 

Andersen lays out the structure of the model and highlights factors important for understanding its economic performance. He then looks into specific policy areas based on Denmark's experiences regarding labor market policies (flexicurity), pension systems, and preparation for an aging population; and addresses the challenges arising from new technologies and globalization.

As a term, “the Nordic model” refers broadly to the political, economic, and social structures of Denmark, Finland, Iceland, Norway, and Sweden. Despite much variation, shared commitments to democratic governance, robust social welfare policies, and a balanced public/private economy unify these five countries, sometimes referred to in the singular as “Norden.” In recent decades, Norden has delivered on a number of policy fronts, so these five cousin countries often top the charts for levels of happiness, social trust, democratic outcomes, and economic stability.

Though North American progressive leaders often look to Norden for inspiration, Trygve Ugland argues here that a critical part of what makes the Nordic model work is its openness to adaptability, which also includes closely watching developments in the United States and Canada. Exchanges between the two blocs, he suggests, have had important ramifications for the success of the Nordic model. Similarly, he argues that both Canada and the United States could learn much from the Nordic model but that it can’t be a blueprint for ready-made success; rather, the flexibility and pragmatic, context-sensitive responsiveness inherent to the Nordic model mean that it will look different wherever it is adopted.