TY  - JOUR
AU  - Björklund, Anders
AU  - Freeman, Richard
TI  - Searching for Optimal Inequality/Incentives
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14014
PY  - 2008
Y2  - May 2008
DO  - 10.3386/w14014
UR  - http://www.nber.org/papers/w14014
L1  - http://www.nber.org/papers/w14014.pdf
N1  - Author contact info:
Anders Bjorklund
Swedish Institute for Social Research
Stockholm University
SE-10691 Stockholm
Sweden
E-Mail: anders@sofi.su.se

Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA  02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org
M1  - published as Anders Björklund, Richard B. Freeman. "Searching for Optimal Inequality/Incentives," 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  - This paper examines the evolution of economic inequality in Sweden before, during and after the major macro-economic recession in the early 1990s. Earnings and income inequality increased after the downturn, but government safety net programs buttressed disposable income for those with low income, and despite the rise in inequality, Sweden remained one of the most egalitarian economies in the world. The rise in inequality raised the return to observable skills, but the returns are still too low to explain that Sweden moved to the top of the league tables in knowledge intensive activities. Our analysis of attitudes to inequality shows that more Swedes expressed more concern over the inequity in inequality after the rise in inequality in the 1990s than in the past. Further, more Swedes expressed greater dissatisfaction with wages and working conditions. On the other hand, the rise in unemployment did not reduce overall subjective well being, probably because individuals adapted to higher levels of unemployment.
ER  -