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In: Reforming the Welfare State: Recovery and Beyond in Sweden

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  • Anders Björklund
  • Richard B. Freeman

Abstract

This paper examines the evolution of economic inequality in Sweden before, during and after the major macro-economic recession in the early 1990s. Earnings and income inequality increased after the downturn, but government safety net programs buttressed disposable income for those with low income, and despite the rise in inequality, Sweden remained one of the most egalitarian economies in the world. The rise in inequality raised the return to observable skills, but the returns are still too low to explain that Sweden moved to the top of the league tables in knowledge intensive activities. Our analysis of attitudes to inequality shows that more Swedes expressed more concern over the inequity in inequality after the rise in inequality in the 1990s than in the past. Further, more Swedes expressed greater dissatisfaction with wages and working conditions. On the other hand, the rise in unemployment did not reduce overall subjective well being, probably because individuals adapted to higher levels of unemployment.

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This chapter was published in:

  • Richard B. Freeman & Birgitta Swedenborg & Robert Topel, 2010. "Reforming the Welfare State: Recovery and Beyond in Sweden," NBER Books, National Bureau of Economic Research, Inc, number free05-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 5358.

    Handle: RePEc:nbr:nberch:5358

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
    2. Dan Devroye & Richard Freeman, 2002. "Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries?," CEP Discussion Papers dp0552, Centre for Economic Performance, LSE.
    3. Anders Bjorklund & Richard B. Freeman, 1997. "Generating Equality and Eliminating Poverty, the Swedish Way," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 33-78 National Bureau of Economic Research, Inc.
    4. Aaberge, Rolf & Björklund, Anders & Jäntti, Markus & Palme, Mårten & Pedersen, Peder & Smith, Nina & Wennemo, Tom, 1996. "Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States," Working Paper Series in Economics and Finance 98, Stockholm School of Economics, revised Aug 2002.
    5. Matthew J. Lindquist, 2005. "Capital-Skill Complementarity and Inequality in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 711-735, December.
    6. Nahum, Ruth-Aïda, 2005. "Income Inequality and Growth: A Panel Study of Swedish Counties 1960-2000," Working Paper Series 2005:8, Uppsala University, Department of Economics.
    7. Richard B. Freeman & Robert Topel & Birgitta Swedenborg, 1997. "The Welfare State in Transition: Reforming the Swedish Model," NBER Books, National Bureau of Economic Research, Inc, number free97-1.
    8. Magnus Gustavsson, 2007. "The 1990s rise in Swedish earnings inequality -- persistent or transitory?," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 25-30.
    9. Markus Jäntti & Eva Österbacka & Oddbjörn Raaum & Tor Eriksson & Anders Björklund, 2002. "Brother correlations in earnings in Denmark, Finland, Norway and Sweden compared to the United States," Journal of Population Economics, Springer, vol. 15(4), pages 757-772.
    10. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-18, December.
    11. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
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    Cited by:
    1. Björklund, Anders & Roine, Jesper & Waldenström, Daniel, 2008. "Intergenerational top income mobility in Sweden – A combination of equal opportunity and capitalistic dynasties," Working Paper Series in Economics and Finance 705, Stockholm School of Economics.
    2. Nguyen Trung & Kimoon Cheong & Pham Nghi & Won Kim, 2013. "Relationship Between Socio-Economic Values and Wellbeing: An Overview Research in Asia," Social Indicators Research, Springer, vol. 111(2), pages 453-472, April.
    3. Rooth, Dan-Olof & Stenberg, Anders, 2011. "The Shape of the Income Distribution and Economic Growth: Evidence from Swedish Labor Market Regions," IZA Discussion Papers 5486, Institute for the Study of Labor (IZA).
    4. Ruprah, Inder J. & Luengas, Pavel, 2011. "Monetary policy and happiness: Preferences over inflation and unemployment in Latin America," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 59-66, February.

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