Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 647:
Economic Performance and Work Activity in Sweden affter the Crisis of the early 1990s

Steven J. Davis () and Magnus Henrekson ()

Abstract: Abstract: Following a severe contraction in the early 1990s, the Swedish economy accumulated a strong record of output growth coupled with a disappointing performance in the labor market. As of 2005, hours worked per person 20–64 years of age are 10.5 percent below the 1990 peak and a mere one percent above the 1993 trough. Employment rates tell a similar story. Our explanation for Sweden’s weak performance with respect to market work activity highlights the role of high tax rates on labor income and consumption expenditures, wage-setting arrangements that compress relative wages, business tax policies that disfavor labor-intensive industries and technologies, and a variety of policies and institutional arrangements that disadvantage younger and smaller businesses. This last category includes tax policies that penalize wealth accumulation in the form of owner-operated businesses, a pension system that steers equity capital and loanable funds to large incumbent corporations, and legally mandated job-security provisions that weigh more heavily on smaller and younger businesses. We describe these features of the Swedish institutional setup and provide evidence of their consequences based largely on international comparisons.

Keywords: Business taxation; Industry structure; Swedish economic performance; Tax effects; Time allocation; Wage-setting institutions; Work activity; (follow links to similar papers)

JEL-Codes: D13; H30; J20; L52; O52; (follow links to similar papers)

47 pages, December 8, 2006, Revised August 3, 2007

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

hastef0647.pdf    PDF-file (482kB) 
Download Statistics
This paper is published as:
Davis, Steven J. and Magnus Henrekson, (2010), 'Economic Performance and Market Work Activity in Sweden after the Crisis of the Early 1990s' in Freeman, Richard, Birgitta Swedenborg and Robert Topel (eds.) Reforming the Welfare State: Recovery and Beyond in Sweden, National Bureau of Economic Research Conference Report, chapter 7, pages 225-252, University of Chicago Press.

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:hastef:0647 This page was generated on 2014-12-14 19:23:08