Generating Equality and Eliminating Poverty, the Swedish Way

74 Pages Posted: 16 Jul 2000 Last revised: 8 Jul 2022

See all articles by Anders Bjorklund

Anders Bjorklund

Stockholm University; IZA Institute of Labor Economics

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: December 1994

Abstract

Sweden has a remarkable record in reducing inequality and virtually eliminating poverty. This paper shows that: 1) Sweden achieved its egalitarian income distribution and eliminated poverty largely because of its system of earnings and income determination, not because of the homogeneity of the population nor of its educational system. 2) In the job market Sweden is distinguished by a relatively egalitarian distribution of hours of work among those employed, which may be an interrelated part of the Swedish economic system, and until the recent recession, by a high employment rate. 3) Tax and transfer policies contribute substantially to Sweden's overall distribution record. In contrast to many social welfare systems, Sweden's is largely a workfare system, providing benefits for those with some work activity. 4) Part of Sweden's historic success in maintaining jobs for low wage workers while raising their wages resulted from policies that directly or indirectly buttress demand for low skill workers, notably through public sector employment. 5) Sweden's tax and transfer policies have maintained the position of lower income workers and families, including those with children, during its recent economic decline.

Suggested Citation

Bjorklund, Anders and Freeman, Richard B., Generating Equality and Eliminating Poverty, the Swedish Way (December 1994). NBER Working Paper No. w4945, Available at SSRN: https://ssrn.com/abstract=226545

Anders Bjorklund (Contact Author)

Stockholm University ( email )

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Richard B. Freeman

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