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The Rise, Fall and Revival of a Capitalist Welfare State: What are the Policy Lessons from Sweden

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Author Info

  • Bergh, Andreas

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

This paper discusses a number of questions with regard to Sweden’s economic and political development: How did Sweden become rich? What explains Sweden’s high level of income equality? What were the causes of Sweden’s problems from 1970 to 1995? How is it possible that Sweden, since the crisis of the early 1990s, is growing faster than most EU countries despite its high taxes and generous welfare state? These questions are analyzed using recent insights from institutional economics, as well as studies of inequality and economic growth. The main conclusion is that there is little, if any, Swedish exceptionalism: Sweden became rich because of well-functioning capitalist institutions, and inequality was low before the expansion of the welfare state. The recent favorable growth record of Sweden, including the period of financial stress (2008–2010), is a likely outcome of a number of far-reaching structural reforms implemented in the 1980s and 90s.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 873.

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Length: 28 pages
Date of creation: 17 May 2011
Date of revision:
Handle: RePEc:hhs:iuiwop:0873

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Related research

Keywords: Sweden; Welfare state; Equality; Growth; Institutions; Capitalism;

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References

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  1. Björklund, Anders & Roine, Jesper & Waldenström, Daniel, 2008. "Intergenerational Top Income Mobility in Sweden: A Combination of Equal Opportunity and Capitalistic Dynasties," IZA Discussion Papers 3801, Institute for the Study of Labor (IZA).
  2. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
  3. De Gregorio, Jose & Guidotti, Pablo E., 1995. "Financial development and economic growth," World Development, Elsevier, vol. 23(3), pages 433-448, March.
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Cited by:
  1. Braunerhjelm, Pontus & Henrekson, Magnus, 2013. "Entrepreneurship, Institutions and Economic Dynamism: Lessons from a Comparison of the United States and Sweden," Working Papers 2012:19, Swedish Entrepreneurship Forum.

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