Lund Papers in Economic History,
Lund University, Department of Economic History

Abstract: Baumol’s cost disease is a wellknown theorem, but its consequences are rarely addressed in economic-political discourse. This paper highlights the implications of Baumol’s cost disease and shows that in real terms the once so celebrated “Swedish Model” has lost its exclusive position relative to other European countries. Even worse, since 1995 Swedish welfare services has in general lost in content when measured in constant prices. This is further aggravated when counted per capita, especially when it comes to elderly care where demands have increased with the growth of the population in higher ages.

Keywords: welfare services; constant prices; welfare state

JEL-codes: H51; H52; H53; N34

Language: English

13 pages, February 18, 2026

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