TY  - JOUR
AU  - Davis, Steven J
AU  - Henrekson, Magnus
TI  - Industrial Policy, Employer Size, and Economic Performance in Sweden
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5237
PY  - 1995
Y2  - August 1995
DO  - 10.3386/w5237
UR  - http://www.nber.org/papers/w5237
L1  - http://www.nber.org/papers/w5237.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. "Industrial Policy, Employer Size, and Economic Performance in Sweden," in Richard B. Freeman, Robert Topel, and Birgitta Swedenborg, editors, "The Welfare State in Transition: Reforming the Swedish Model" University of Chicago Press (1997)

AB  - The pre-1990 Swedish tax system strongly disfavored younger, smaller and less capital-intensive firms and sectors and discouraged entrepreneurship and family ownership of businesses in favor of institutional ownership.  Credit market regulations, the national pension system, employment security laws and centralized wage setting in Sweden reinforced the distortionary impact of the tax system.  We describe the relevant Swedish policies and institutional arrangements, and we explain why the attendant distortions are likely to have hampered the efficient allocation of resources, reduced productivity, and retarded economic growth and recovery. We also develop evidence on the consequences of these distortions for the size structure and industrial distribution of employment. Taking the U.S. industrial distribution as a benchmark that reflects a comparatively neutral set of policies and institutions, Sweden's employment distribution is sharply tilted away from lower wage industries, less capital-intensive industries, and industries characterized by greater employment shares for smaller firms and establishments.  Compared to other OECD economies, Sweden has the lowest rate of self employment, a dominant role for larger firms, and highly concentrated ownership and control of private-sector economic activity.
ER  -