The Rise, Fall and Revival of a Capitalist Welfare State: What are the Policy Lessons from Sweden
AbstractThis 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 InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 873.
Length: 28 pages
Date of creation: 17 May 2011
Date of revision:
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Sweden; Welfare state; Equality; Growth; Institutions; Capitalism;
Find related papers by JEL classification:
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
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