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Labour's share in twentieth-century Sweden: a reinterpretation

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  • Erik Bengtsson

Abstract

The distribution of national income between capital and labour is a classical theme in political economy. This paper takes a long-run perspective to the issue and asks two questions: How did the distribution of income between capital and labour develop in Sweden from 1900 to 2000? And how can this development best be explained? It is shown that labour's share in Sweden in the 100 years from 1900 to 2000 saw three important shifts, and the three shifts are analyzed. Around 1920, there was a surge in labour's share as workers mobilised in trade unions and universal suffrage and the eight-hour working day in manufacturing strengthened the bargaining power of workers. From 1950 until the late 1970s, there was another period of an increasing labour share, when the welfare state expanded and trade unions were strong. Contra the well-known postwar wage moderation analysis, there was no wage moderation in Sweden during the 1950s and 1960s, but rather the opposite: wages increased faster than productivity which caused a redistribution from capital to labour and reduced income inequality. The third shift occurred around 1980 when labour's share started a continuous decrease, beginning with several devaluations intended to increase profitability and competitiveness of Swedish business.

Suggested Citation

  • Erik Bengtsson, 2014. "Labour's share in twentieth-century Sweden: a reinterpretation," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 62(3), pages 290-314, November.
  • Handle: RePEc:taf:sehrxx:v:62:y:2014:i:3:p:290-314
    DOI: 10.1080/03585522.2014.932837
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Molinder, Jakob, 2019. "Why Was Unemployment so Low in Postwar Sweden? An Analysis with New Unemployment Data by Manufacturing Industry, 1935-1948," Lund Papers in Economic History 201, Lund University, Department of Economic History.
    2. Bengtsson, Erik & Waldenström, Daniel, 2018. "Capital Shares and Income Inequality: Evidence from the Long Run," The Journal of Economic History, Cambridge University Press, vol. 78(03), pages 712-743, September.
    3. D., Ivan, 2017. "Stability of the labour shares: evidence from OECD economies," MPRA Paper 79822, University Library of Munich, Germany.
    4. Bengtsson, Erik, 2019. "The Origins of the Swedish Wage Bargaining Model," Lund Papers in Economic History 195, Lund University, Department of Economic History.
    5. Giacomo Gabbuti, 2018. "Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015," HHB Working Papers Series 13, The Historical Household Budgets Project.
    6. Jakub Growiec & Peter McAdam & Jakub Muck, 2018. "On the Optimal Labor Income Share," Working Papers 2018-031, Warsaw School of Economics, Collegium of Economic Analysis.
    7. Bengtsson, Erik, 2016. "Inequality and the working class in Scandinavia 1800 to 1910 - Workers' share of growing income," Lund Papers in Economic History 142, Lund University, Department of Economic History.
    8. Andrea Coveri & Mario Pianta, 2019. "The Structural Dynamics of Income Distribution:Technology, Wages and Profits," Working Papers 1901, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2019.
    9. Trofimov, Ivan D., 2018. "The secular decline in profit rates: time series analysis of a classical hypothesis," MPRA Paper 88248, University Library of Munich, Germany.
    10. 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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