Reforming the Welfare State: Recovery and Beyond in Sweden

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Over the course of the twentieth century, Sweden carried out one of the most ambitious experiments by a capitalist market economy in developing a large and active welfare state. Sweden's generous social programs and the economic equality they fostered became an example for other countries to emulate. Of late, Sweden has also been much discussed as a model of how to deal with financial and economic crisis, due to the country's recovery from a banking crisis in the mid-1990s. At that time economists heatedly debated whether the welfare state caused Sweden's crisis and should be reformed—a debate with clear parallels to current concerns over capitalism. 

Bringing together leading economists, Reforming the Welfare State examines Sweden's policies in response to the mid-1990s crisis and the implications for the subsequent recovery. Among the issues investigated are the way changes in the labor market, tax and benefit policies, local government policy, industrial structure, and international trade affected Sweden's recovery. The way that Sweden addressed its economic challenges provides valuable insight into the viability of large welfare states, and more broadly, into the way modern economies deal with crisis.

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Product Details

Meet the Author

Richard B. Freeman is a research associate of the National Bureau of Economic Research and holds the Herbert Ascherman Chair in Economics at Harvard University. Birgitta Swedenborg is research director of the Center for Business and Policy Studies in Sweden. Robert Topel is the Isidore Brown and Gladys J. Brown Professor in Urban and Labor Economics in the Booth Graduate School of Business at the University of Chicago and a research associate at the National Bureau of Economic Research.

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Table of Contents



Richard B. Freeman, Birgitta Swedenborg, and Robert Topel

1. Searching for Optimal Inequality / Incentives

Anders Björklund and Richard B. Freeman

2. Policies Affecting Work Patterns and Labor Income for Women

Ann-Sofi e Kolm and Edward P. Lazear

3. Wage Determination and Employment in Sweden Since the Early 1990s: Wage Formation in a New Setting

Peter Fredriksson and Robert Topel

4. Labor Supply, Tax Base, and Public Policy in Sweden

Thomas Aronsson and James R. Walker

5. Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?

Anders Forslund and Alan Krueger

6. How Sweden’s Unemployment Became More Like Europe’s

Lars Ljungqvist and Thomas J. Sargent

7. Economic Performance and Market Work Activity

in Sweden after the Crisis of the Early 1990s

Steven J. Davis and Magnus Henrekson

8. Competition, Regulation, and the Role of Local

Government Policies in Swedish Markets

Stefan Fölster and Sam Peltzman

9. What Have Changes to the Global Markets for Goods and Services Done to the Viability of the Swedish Welfare State?

Edward E. Leamer


Author Index

Subject Index

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