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2007
This chapter looks in detail at the macroeconomic performance of Denmark, Finland and Sweden. Finland and Sweden have achieved high output growth but less satisfactory employment growth. Denmark has been less successful in terms of output growth, but labour market performance has been impressive. The question is whether the Scandinavian economic model represents a role model for the rest of
Journal of Economic Studies, 2011
PurposeThis paper aims to provide an account of the unemployment performance of two Nordic countries during their recent labour market booms and slumps.Design/methodology/approachBased on the empirical models of Karanassou et al., we conduct dynamic simulation exercises and explore the determinants of unemployment.FindingsThe analysis yields two main findings. First, the capital stock was the most important determinant of the unemployment trajectory in both countries. This result appears in all periods considered: in the slump of the early 1990s and the boom of the late 1990s, as well as in the stabilisation period of the early 2000s. Second, the role of the foreign sector on the unemployment trajectory was significant in Finland, its quantitative impact being one‐third of the effect for the capital stock in the first and third periods, and half of the latter in the second period.Originality/valueThe results illustrate the importance of non‐standard labour market variables in examin...
The Economic Journal, 1996
1999
Over the last 25 years the Danish economy has had difficulties in growing as fast as other EU countries and the United States. While the average growth difference is small, it signals that if this trend persists into the next century, Denmark will not be able to maintain its high position in the world income hierarchy. Moreover, during these years, the number of individuals living on transfer incomes have increased dramatically. Although we interpret both tendencies as signals of structural weaknesses, we are also aware that these developments may reflect that other goals in economic policy have been pursued, such as protecting the environment and/or achieving certain redistributive objectives. This paper analyzes this and other broad policy issues of importance for Denmark.
Reform Capacity and Macroeconomic Performance in the Nordic Countries, 2015
A comparison of the economic performance of Sweden and Finland supports three conclusions. First, it is tempting to see a causal link from crisis to reform illustrated by the developments and economic policies in Finland and Sweden following the crisis in the early 1990s. That crisis may be seen as somewhat of a blessing in disguise. It created a political situation that allowed significant structural reforms to be undertaken, and economic policies have since the crisis been more successful and "responsible" than in earlier periods. Policies have been geared towards fostering structural change and maintaining sound public finances. A second conclusion is that the (current version of the) "Nordic model" is relatively successful in combining equity and efficiency. A third conclusion is that the monetary regime may matter less for economic performance than often argued in the heated debate on the pros and cons of a single currency. While not constituting a laboratory experiment, a comparison of the performance of Finland and Sweden supports this contention. Admittedly, the jury is still out in the sense that Finland is now facing a structural weakness of its export base, and it remains to be seen whether domestic wage adjustment will allow this difficulty to be overcome within a reasonable time span.
2016
Full bibliographic details must be given when referring to, or quoting from full items including the author's name, the title of the work, publication details where relevant (place, publisher, date), pagination, and for theses or dissertations the awarding institution, the degree type awarded, and the date of the award.
Econ Journal Watch, 2006
Sturm have written a valuable survey of the literature that uses the Gwartney and Lawson economic freedom (EFW) index. Their discussion of the index's theoretical underpinnings and methodological ins and outs itself should be useful to scholars interested in the field. Also their survey of the empirical economic freedom-economic growth literature is a useful contribution.
2006
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 owneroperated 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. JEL Classification: L52; J20; H30; D13; O52.
The Third Globalization: Can Wealthy Nations Stay Wealthy in the Twenty-First Century? Edited by Dan Breznitz and John Zysman. Oxford: Oxford University Press, 2013
This chapter explores how wealthy countries navigate the tension between promoting capitalism and regulating it by analyzing developments in Denmark, Finland and Sweden. These three Nordic states offer unique insight into this “double bind” for three reasons. First, these small, open economies are uniquely exposed to the challenges such as economic internationalization, the decomposition of production and the services transformation. Each country experienced acute economic shocks during the late 1980s and early 1990s (Fellman 2008; M. J. Iversen and Andersen 2008; Sjögren 2008). Second, these shocks threatened traditional solutions to the double bind, including the centralized bargains among industry, labor and policy-makers that defined postwar adjustment (T. Iversen 1996; T. Iversen and Wren 1998; Pontusson and Swenson 1996). These “neo-corporatist” deals were widely perceived to inhibit adaptation to disruptive, economic and technological changes (Henrekson et al. 1996; Miller 1991; Tainio et al. 1997). Third, the Nordic countries responded successfully to these challenges. Centralized bargaining did not inhibit adaptation, but instead supported movement into new, knowledge-intensive activities and industries (Castells and Himanen 2002; Glimstedt and Zander 2003; Kristensen 2006). As a result, these economies have proven surprisingly resilient to the challenges outlined in this volume (Gylfason et al. 2010). In adapting, Denmark, Finland and Sweden neither defended nor dismantled traditional economic institutions, but instead converted institutionalized cooperation among organized economics actors to perform new functions. In contrast to other continental European economies, adaptation did not reflect a “competitive” pact to reduce wage and non-wage costs (Rhodes 1998). Nordic Europe instead relied on “creative” corporatist bargaining, adapting cooperation to invest in new supply-side resources such as risk capital, human capital and research. These inputs created more space for new, entrepreneurial actors that had struggled under traditional, neo-corporatist bargaining and, in so doing, facilitated rapid movement into new activities and industries (Ornston forthcoming).
Journal of Modern European History, 2011
The Nordic countries are often bundled together, as representatives of a ‘model’ which combines high living standards and an open market economy with social insurance and ambitious public services. Yet, the economic and political development of Denmark, Finland, Norway and Sweden towards this model has taken quite different roads. Sweden’s economic development from the late nineteenth century onwards can be seen as a rather spontaneous industrial breakthrough, whereas the state has in both Norway and Finland assumed a more active and interventionist role in mobilizing resources and managing natural endowments. However, the four countries are quite similar in their acceptance of the market economy, technical progress and economic openness, coupled with a pursuit of equality and a state that has alleviated resistance to change by signalling a will to share the gains and losses due to structural change.
British Journal of Industrial Relations, 1992
By the late 1970s, supply-side theory had become something of a new economic orthodoxy. From the supply-side perspective, labour market inflexibility explains mass unemployment. In this context the presumably greater flexibility of the labour market in the USA was seen as an explanation of its superior employment record relative to European economies. Unlike most European countries, Sweden, which is highly regulated, does reasonably well in employment terms. The authors conclude that the Swedish model has proved its value with regard to labour market policy, especially with regard to the duration of unemployment, and that the Swedish model still contains relevant characteristics for other European countries. Active labour market policy is a way out of the unemployment trap. The active labour market policy may serve as an alternative for deregulation in order to augment the flexibility of the labour market.
Intereconomics, 2018
This research provides an overview of the recent developments in the functioning of the Nordic model of economic development and welfare. In order to provide a tractable conceptual framework, the paper starts by introducing the key mechanisms of the Nordic economies, as framed in the most recent economic and political economy literature. The three distinct but interrelated features of the Nordic model are a high degree of compression of wage differentials, a dynamic process of creative destruction and innovation, and a high level of public welfare spending. This framework is then used to interpret recent developments and future prospects, mostly related to the implications of population ageing and automation for the future sustainability of public spending in the Nordic economies.
Journal of northern studies/Journal of Northern studies, 2021
Governments around the Circumpolar world are attempting to ensure the long-term viability of northern economies, generally by supporting the natural resource economy and seeking opportunities to promote "new economy" commercial development. The challenge is formidable, in large measure because few Arctic or sub-Arctic regions have the research capability, highly skilled personnel, venture capital, accessible markets and entrepreneurial drive necessary to compete in the global science and technology-based economy. Communities in Norrbotten County in Sweden have made significant efforts to develop contemporary economic opportunities. This essay considers efforts made by a series of northern centres-Arjeplog, Kiruna, Luleå, Skellefteå and Haparanda-to build jobs and businesses beyond traditional northern economic activities, demonstrating that creative and determined northern regions can compete successfully in the age of rapid technological transformation.
RePEc: Research Papers in Economics, 1996
Swedes, out of a population of around four million at that time, emigrated, mainly to North America, in search of a better life. Today, Sweden is one of the richest countries in the world. In terms of human development, UNDP's Human Development Index (HDI) gave Sweden a respectable fourth place in the 1991 Human Development Report (HDR). In the gender-disparity-adjusted HDI of the HDR of 1992, Sweden improved its rank to number one in the world. The main purpose of this country study is to summarise the major reasons for this spectacular and sustained success in economic and social development, and to discuss, as a background paper for the 1996 Human development Report, the inter-linkages between macroeconomic development, political and institutional development and human development. Since the early process of industrialisation and modernisation may be of some general relevance, the historical part is given considerable attention.
The Nordic Economic, Social and Political Model, 2021
The Nordic model is the 20th-century Scandinavian recipe for combining stable democracies, individual freedom, economic growth and comprehensive systems for social security. But what happens when Sweden and Finland-two countries topping global indexes for competitiveness, productivity, growth, quality of life, prosperity and equality-start doubting themselves and their future? Is the Nordic model at a crossroads? Historically, consensus, continuity, social cohesion and broad social trust have been hailed as key components for the success and for the self-images of Sweden and Finland. In the contemporary, however, political debates in both countries are increasingly focused on risks, threats and worry. Social disintegration, political polarization, geopolitical anxieties and threat of terrorism are often dominant themes. This book focuses on what appears to be a paradox: countries with low-income differences, high faith in social institutions and relatively high cultural homogeneity becoming fixated on the fear of polarization, disintegration and diminished social trust. Unpacking the presentist discourse of "worry" and a sense of interregnum at the face of geopolitical tensions, digitalization and globalization, as well as challenges to democracy, the chapters take steps back in time and explore the current conjecture through the eyes of historians and social scientists, addressing key aspects of and challenges to both the contemporary and the future Nordic model. In addition, the functioning and efficacy of the participatory democracy and current protocols of decision-making are debated. This work is essential reading for students and scholars of the welfare state, social reforms and populism, as well as Nordic and Scandinavian studies.
International Labour Review
This paper analyzes the major transformations of the Swedish model, its welfare regime, employment and production systems. We argue that the current model appears to be more in line with the three core components of the original model developed during the 1950s than it did two decades ago. The changes in macroeconomic policy towards a more restrictive and anti- inflationary approach, the reorientation of active labour market policies towards supply oriented measures and the structural reforms undertaken in the tax and social protection systems during the 1990s suggest a revival and renaissance of the traditional Swedish model The Swedish welfare state remains today, by international sta ndards, clearly universal and inclusive in nature and still enjoys a high level of across-the-board pol itical and public support. Modifications in the industrial relations system, in particular the clear tendency to a re-coordination of collective bargaining have also played a vital role in the reco...
1999
The paper performs a reinvestigation of Nordic wage formation along the lines of Calmfors and Nymoen 1990 with data that include the recent period of high unemployment and low in ation. Among the main ndings are: 1There has been no shift in Nordic wage formation since 1987. 2The wage formation in Denmark, Finland, Norway and Sweden is fairly similar, even though the unemployment histories di er. 3Real wage exibility is not particularly high in the Nordic countries. 4No strong conclusions can be drawn about the e ects of active labour market programs, but an increase in the supply of such programs seems to increase the equilibrium total unemployment rate. 5Only in Norway is there evidence that incomes policy has been e ective. The paper gives some, but limited, support to those who attribute the good employment performance of Norway and Sweden until the late 1980s to aggregate demand factors and devaluations. The paper draws heavily on joint w ork with Oddbj rn Raaum and Fredrik Wulfsberg. We h a ve bene tted from comments from Anders Forslund, Kalle Moene, Steinar Holden and from seminar participants at the Universities of Stockholm and Uppsala and at FIEF in Stockholm. W e are also grateful to
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