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Economic Performance and Market Work Activity in Sweden after the Crisis of the Early 1990s

Economic Performance and Market Work Activity in Sweden after the Crisis of the Early 1990s

Chapter:
(p.225) 7 Economic Performance and Market Work Activity in Sweden after the Crisis of the Early 1990s
Source:
Reforming the Welfare State
Author(s):
Steven J. DavisMagnus Henrekson
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226261911.003.0008

This chapter describes Swedish developments with respect to output and market work activity. It discusses several aspects of the Swedish institutional setup that repress market work activity. The discussion highlights the role of high tax rates on labor income and consumption expenditures, wage-setting arrangements that compress relative wages, and business tax policies that disfavor labor-intensive industries and technologies. The chapter describes these features of the Swedish institutional setup and provides evidence of their consequences based on Swedish outcomes and international comparisons. The chapter also identifies some noteworthy policy changes since 2006 and their potential effects on market work activity in Sweden.

Keywords:   economic performance, market work activity, Sweden, economic crisis, tax rates

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