Public Employment, Taxes and the Welfare State in Sweden
AbstractAll employment growth in Sweden since the early 1960's is attributable to labor market entry of women, working in local public sector jobs that implement the Welfare State. Sweden has 'monetized' or 'nationalized' the family. Women are paid at public expense to provide household services for other families. Subsidizing purchased household services encourages labor force participation of women through substitution of market- for self-provided services. It also reduces the marginal cost prices of household goods and encourages substitution of household goods for material goods. A kind of social cross-hauling occurs: when subsidies are increased and taxes raised to finance them, production of material goods declines and production of household goods increases. Women enter the market and work more in each other's households and less in the material goods sector. Efficiency distortions of current child policies in Sweden may be as large as half of total expenditures on childcare. The current 90% subsidies to public childcare probably involve large deadweight losses. A one percent decline in the rate of subsidy accompanied by balanced budget tax decreases would reduce the deadweight losses of tax distortions by one percent, at current policy levels.
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Bibliographic InfoPaper provided by Chicago - Center for Study of Economy and State in its series University of Chicago - George G. Stigler Center for Study of Economy and State with number 106.
Date of creation: 1995
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Other versions of this item:
- Sherwin Rosen, 1997. "Public Employment, Taxes, and the Welfare State in Sweden," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 79-108 National Bureau of Economic Research, Inc.
- Sherwin Rosen, 1995. "Public Employment, Taxes and the Welfare State in Sweden," NBER Working Papers 5003, National Bureau of Economic Research, Inc.
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- Theodore C. Bergstrom & S�ren Blomquist, .
"The Political Economy of Subsidized Day Care,"
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- N. S. Blomquist & U. Hansson-Brusewitz, 1990. "The Effect of Taxes on Male and Female Labor Supply in Sweden," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 317-357.
- Ted Bergstrom & Soren Blomquist, 1994. "Political Economy of Subsidized Day Care," Public Economics 9401001, EconWPA.
- Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
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