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Markets and politics: the Swedish urban–rural wage gap, 1865–1985


  • Christer Lundh
  • Svante Prado


The persistence of a significant urban–rural wage gap challenges the notion of competitive equilibrium. This paper examines the earnings gap between urban and rural workers in Sweden between 1865 and 1985. Proper measurement by cost-of-living, working hours and unemployment causes most of the nominal gap to disappear. What remains is a long-run equilibrium that was interrupted by major external shocks in the interwar years when the urban wage premium soared. The increase in the wage gap stemmed from asymmetric labor market responses to the external shocks, explained by the dissimilar institutional configurations of the two labor markets.

Suggested Citation

  • Christer Lundh & Svante Prado, 2015. "Markets and politics: the Swedish urban–rural wage gap, 1865–1985," European Review of Economic History, Oxford University Press, vol. 19(1), pages 67-87.
  • Handle: RePEc:oup:ereveh:v:19:y:2015:i:1:p:67-87.

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    Cited by:

    1. Bengtsson, Erik & Prado, Svante, 2019. "The rise of the middle class: The income gap between salaried employees and workers in Sweden, 1830-1935," Lund Papers in Economic History 186, Lund University, Department of Economic History.

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