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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 lunch,†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.

Suggested Citation

  • Andreas Bergh, 2006. "Is the Swedish Welfare State A Free Lunch?," Econ Journal Watch, Econ Journal Watch, vol. 3(2), pages 210-235, May.
  • Handle: RePEc:ejw:journl:v:3:y:2006:i:2:p:210-235

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    References listed on IDEAS

    1. Andreas Bergh, 2004. "The Universal Welfare State: Theory and the Case of Sweden," Political Studies, Political Studies Association, vol. 52, pages 745-766, December.
    2. 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 25 Jan 2007.
    3. 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.
    4. 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.
    5. Davidsson, Per & Henrekson, Magnus, 2002. "Determinants of the Prevalence of Start-Ups and High-Growth Firms," Small Business Economics, Springer, vol. 19(2), pages 81-104, September.
    6. 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.
    7. 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.
    8. Agell, Jonas & Ohlsson, Henry & Thoursie, Peter Skogman, 2006. "Growth effects of government expenditure and taxation in rich countries: A comment," European Economic Review, Elsevier, vol. 50(1), pages 211-218, January.
    9. Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1999. "Growth and the public sector: A reply," European Journal of Political Economy, Elsevier, vol. 15(2), pages 359-366, June.
    10. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
    11. Peter H. Lindert, 2003. "Why the Welfare State Looks Like a Free Lunch," NBER Working Papers 9869, National Bureau of Economic Research, Inc.
    12. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
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    Cited by:

    1. Joshua Hall & Robert Lawson, 2008. "Theory and evidence on economic freedom and economic growth: A comment," Economics Bulletin, AccessEcon, vol. 15(18), pages 1-6.
    2. Andreas Bergh, 2006. "Work Incentives and Employment Are the Wrong Explanation of Sweden's Success," Econ Journal Watch, Econ Journal Watch, vol. 3(3), pages 452-460, September.
    3. Peter H. Lindert, 2006. "Second Reply to Bergh," Econ Journal Watch, Econ Journal Watch, vol. 3(3), pages 461-465, September.
    4. Berthold, Norbert & Brunner, Alexander, 2007. "Gibt es ein europäisches Sozialmodell?," Discussion Paper Series 100, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. repec:ebl:ecbull:v:15:y:2008:i:18:p:1-6 is not listed on IDEAS

    More about this item


    Sweden; USA; the welfare state; female employment; work incentives; economic freedom;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs


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