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

Author

Listed:
  • Ramana Ramaswamy

    (International Monetary Fund)

Abstract

This paper argues that Sweden's structural problems of slow productivity growth and high wage inflation can be linked in an important way to the institutional features of its labor market, which is characterized by a combination of centralized bargaining and wage equalization. In particular, Sweden's high wage inflation in the 1980s was due to the combined impact of the breakdown of the leading role assigned to the traded goods sector in wage determination and high wage drift. Slow productivity growth is attributed to the inappropriateness of the policy of wage equalization in an environment in which flexible work practices have become increasingly important.

Suggested Citation

  • Ramana Ramaswamy, 1994. "The Structural Crisis in the Swedish Economy: Role of Labor Markets," IMF Staff Papers, Palgrave Macmillan, vol. 41(2), pages 367-379, June.
    • Handle: RePEc:pal:imfstp:v:41:y:1994:i:2:p:367-379
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    Cited by:

    1. Erik Bengtsson, 2015. "Wage restraint in Scandinavia: during the postwar period or the neoliberal age?," European Review of Economic History, European Historical Economics Society, vol. 19(4), pages 359-381.
    2. Fehn, Rainer, 2002. "Arbeitsmarktflexibilisierung und Arbeitslosigkeit," Discussion Paper Series 54, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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