TY  - JOUR
AU  - Davis, Steven J
AU  - Henrekson, Magnus
TI  - Economic Performance and Work Activity in Sweden after the Crisis of the Early 1990s
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12768
PY  - 2006
Y2  - December 2006
DO  - 10.3386/w12768
UR  - http://www.nber.org/papers/w12768
L1  - http://www.nber.org/papers/w12768.pdf
N1  - Author contact info:
Steven J. Davis
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7312
Fax: 773/834-0733
E-Mail: Steven.Davis@ChicagoBooth.edu

Magnus Henrekson
Research Institute of Industrial Economics
P.O. Box 55665
S-102 15 Stockholm Sweden
E-Mail: Magnus.Henrekson@ifn.se
M1  - published as Steven J. Davis, Magnus Henrekson. "Economic Performance and Market Work Activity in Sweden After the Crisis of the Early 1990s," in Richard B. Freeman, Birgitta Swedenborg and Robert Topel, editors, "Reforming the Welfare State: Recovery and Beyond in Sweden" University of Chicago Press (2010)

M3  - presented at "Swedish Welfare State", September 10, 2006
AB  - 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.
ER  -