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Reform Capacity and Macroeconomic Performance in the Nordic Countries$
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Torben M. Andersen, Michael Bergman, and Svend E. Hougaard Jensen

Print publication date: 2015

Print ISBN-13: 9780198717102

Published to Oxford Scholarship Online: March 2015

DOI: 10.1093/acprof:oso/9780198717102.001.0001

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Missing the Link?

Missing the Link?

On the Political Economy of Nordic Egalitarianism*

Chapter:
(p.50) 3 Missing the Link?
Source:
Reform Capacity and Macroeconomic Performance in the Nordic Countries
Author(s):

Erling Barth

Karl Ove Moene

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198717102.003.0004

This chapter asks how the Nordic countries have become so egalitarian. It is argued that the political economy of Nordic egalitarianism depends critically on labour market institutions. Both sides of the negotiation table are responsible for the small wage differentials. This essential link may be missing, not only in the minds of the interpreters of the Nordic model, but also in the future of the Nordic countries. Structural change, in the form of uneven mechanization across sectors, may erode the power of both export-led unions and employers. At the same time it may reduce voters’ willingness to pay for redistributive welfare services, thereby threatening the future sustainability of the Nordic model.

Keywords:   wage inequality, labour market institutions, structural change, welfare state support, Nordic model sustainability

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