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Is the Swedish Welfare State A Free Lunch?

  • Andreas Bergh

In his book _Growing Public_ (Cambridge University Press), Peter H. Lindert argues that the welfare state is a “free lunchâ€, i.e. has no negative effect on growth, and he uses Sweden to explain this finding, which he calls the free lunch puzzle. In this comment, I claim that Lindert misrepresents Sweden when it comes to work incentives for the poor, employment of women, and employment of the elderly, and that he does not pay sufficient attention to the many reforms undertaken in Sweden since the late 1980s. I conclude by suggesting that the surprising resilience of the Swedish welfare state can be explained by increasing economic freedom.

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Article provided by Econ Journal Watch in its journal Econ Journal Watch.

Volume (Year): 3 (2006)
Issue (Month): 2 (May)
Pages: 210-235

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Handle: RePEc:ejw:journl:v:3:y:2006:i:2:p:210-235
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  1. Davidsson, Per & Henrekson, Magnus, 2000. "Determinants of the Prevalence of Start-ups and High-Growth Firms," SSE/EFI Working Paper Series in Economics and Finance 381, Stockholm School of Economics, revised 26 May 2002.
  2. Agell, Jonas & Ohlsson, Henry & Skogman Thoursie, Peter, 2003. "Growth Effects of Government Expenditure and Taxation in Rich Countries: A Comment," Research Papers in Economics 2003:14, Stockholm University, Department of Economics.
  3. Agell, J. & Lindh, T. & Ohlsson, H., 1999. "Growth and the Public Sector: a Reply," Papers 1999:1, Uppsala - Working Paper Series.
  4. Peter H. Lindert, 2003. "Why the Welfare State Looks Like a Free Lunch," NBER Working Papers 9869, National Bureau of Economic Research, Inc.
  5. Andreas Bergh, 2004. "The Universal Welfare State: Theory and the Case of Sweden," Political Studies, Political Studies Association, vol. 52, pages 745-766, December.
  6. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
  7. Henrekson, Magnus & Dreber, Anna, 2004. "Female Career Success: Institutions, Path Dependence and Psychology," SSE/EFI Working Paper Series in Economics and Finance 574, Stockholm School of Economics, revised 27 Jan 2005.
  8. Folster, Stefan & Henrekson, Magnus, 2006. "Growth effects of government expenditure and taxation in rich countries: A reply," European Economic Review, Elsevier, vol. 50(1), pages 219-221, January.
  9. Peter Gordon & Lanlan Wang, 2004. "Does Economic Performance Correlate with Big Government?," Econ Journal Watch, Econ Journal Watch, vol. 1(2), pages 192-221, August.
  10. Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
  11. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
  12. Giuseppe Carone & Herwig Immervoll & Dominique Paturot & Aino Salomäki, 2004. "Indicators of Unemployment and Low-Wage Traps: Marginal Effective Tax Rates on Employment Incomes," OECD Social, Employment and Migration Working Papers 18, OECD Publishing.
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