Motivated by the recent controversy about the importance of spin-flip scattering for ultrafast demagnetization in ferromagnets, we study the spin-dependent electron dynamics based on a dynamical Elliott-Yafet mechanism. The key improvement to earlier approaches is the use of a modified Stoner model with a dynamic exchange splitting between majority and minority bands. In the framework of our microscopic model, we find a novel feedback effect between the time-dependent exchange splitting and the spin-flip scattering. This feedback effect allows us to reproduce important properties of the demagnetization dynamics quantitatively. Our results demonstrate that in general Elliott-Yafet spin-flip scattering needs to be taken into account to obtain a microscopic picture of demagnetization dynamics.