The Structural Crisis in the Swedish Economy: Role of Labor Markets

IMF Policy Discussion Papers, December 1, 1993

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The Structural Crisis in the Swedish Economy: Role of Labor Markets

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Bibliographic details

• Authors: Ramana Ramaswamy
• Published: December 1, 1993
• Series: IMF Policy Discussion Papers
• DOI: https://doi.org/10.5089/9781451965032.003

Focus and scope

• Examines the main institutional features of the Swedish labor market.
• Analyzes reasons for high wage inflation and slow productivity growth.
• Situates the analysis within the so-called Swedish model, identified with an advanced welfare state.

Key institutional features analyzed

• Centralized bargaining combined with a policy of wage equalization.
• Solidaristic wages concept: initially conceived as equal pay for equal work.
• Wage equalization policy designed with a view to promoting a favorable macroeconomic performance.

Main findings (as described in the source)

• The Swedish labor market’s distinctive institution is centralized bargaining paired with wage equalization.
• The paper links these institutional features to high wage inflation and slow productivity growth.

Comparative wage spread evidence

• Wage spread for industrial workers (difference between highest and lowest deciles in 1984):
  • Sweden: 34 percent
  • United Kingdom: 210 percent
  • United States: 490 percent