sweeden welfare - J ournal of Economic Literature Vol....

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Journal of Economic Literature Vol. XXXIV (June 1996), pp. 729–740 Rosen: Public Employment and the Welfare State in Sweden Public Employment and the Welfare State in Sweden S HERWIN R OSEN University of Chicago This is a nontechnical summary of a much longer study which will appear with the same title in Richard Freeman, Birgitta Swedenborg, and Robert Topel, eds. (forthcoming). I am espe- cially indebted to Henry Ohlsson and Birgitta Swedenborg, and to Stan Engerman, Vic Fuchs, Assar Lindbeck, Stephen Lundgren, and Agnar Sandmo for comments on initial drafts. I alone am responsible for the views expressed here. I. The Data E MPLOYMENT IN Sweden during the past 35 years reflects growth of the welfare state. Two basic facts dominate the data. First, the local public sector has accounted for all employment growth in Sweden since the early 1960s. Second, almost all of it has been by women. Figure 1 shows that total em- ployment increased by about 20 percent over the period 1963–1993: private sec- tor and central government sector em- ployment remained essentially constant, but local government employment of women increased almost fourfold and employment of men doubled. Services provided by local governments have im- plemented the welfare state in Sweden. Figures 2 and 3 show that the employ- ment of women in local government jobs overwhelmingly accounts for Sweden’s total employment growth. Employment in all sectors increased by about 725,000 workers: the number of females working in local government increased by the same amount and total and sectoral com- position of male employment remained constant. Increasing labor force partici- pation of women was needed to sustain these patterns. Sweden has among the highest fertility and female labor force participation rates among developed na- tions. The increasing role of the state in social insurance and rising labor force participation of women are worldwide trends of the twentieth century, but no- where has the public sector grown so fast, nor achieved such a large scale rela- tive to the economy as in Sweden and other Scandinavian countries. Public em- ployment and public outlays are from 50 to 100 percent larger than in most other developed countries. The standard of liv- ing is high in Sweden. However, causal linkages from the welfare state to high incomes are tenuous: Sweden had achieved one of the highest standards of living in the world well before the Swed- ish Model was implemented. Perhaps it was the great wealth generated by the Swedish economy that allowed this model to grow and flourish, for living standards, while still high and generally growing, have eroded relative to other wealthy nations in the past two or three decades. Economic growth in Sweden 729
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thousands Figure 1. Private and Public Employment in Sweden 1965 2500 2000 1500 1000 500 0 private sector employment 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 local government employment central government employment year Figure 2. Male Employment by Sector 1965 1600 1400 1200 1000 800 600 400 200 private sector 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 local government central government
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sweeden welfare - J ournal of Economic Literature Vol....

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