The aim of the thesis was to study Iceland’s performance as a welfare state during and after the financial crisis in 2007. The research questions of this study are: How did Iceland function as a welfare state during and after the financial crisis? What visible evidence is there of Iceland’s measures to support society during and after the financial crisis?

Iceland’s financial situation suddenly deteriorated in 2007 when the country’s financial sector collapsed and had to be rescued by the state of Iceland. The financial crisis and the rescue operations brought new challenges to the Icelandic people, public finance, employment situation and the public services offered by this Nordic welfare state. This thesis employs quantitative methods to study Iceland’s situation during the years 2007-2017. The data has been collected from the Statistics Iceland and Eurostat.

Iceland’s public services were studied in terms of expenditures, but also in terms of healthcare staff-patient ratios. This thesis studies unemployment and employment levels between age and gender groups, and in terms of total figures per year. Studying the levels and figures has given a broad perspective on the employment situation, which reflects the welfare of the people of Iceland. One of the questions this thesis addresses is this: how has the employment improved between 2007-2017.

As a welfare state, Iceland has been able to maintain its public sector in spite of the financial difficulties of the years under consideration. Even though the expenditures increased in many parts of the public sector during the crisis, unemployment has remained moderate and has even decreased since. The public finance situation has also improved in terms of expenditures and growth of the GDP. Iceland has been able to maintain its public healthcare services, childcare and pension system. This has had a significant impact on the welfare of the entire population of Iceland.