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Welfare and Work in the Open Economy Volume II: Diverse Responses to Common Challenges in Twelve Countries$
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Fritz W. Scharpf and Vivien A. Schmidt

Print publication date: 2000

Print ISBN-13: 9780199240920

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199240922.001.0001

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Sweden and Denmark Defending the Welfare State

Sweden and Denmark Defending the Welfare State

Chapter:
(p.399) 9 Sweden and Denmark Defending the Welfare State
Source:
Welfare and Work in the Open Economy Volume II: Diverse Responses to Common Challenges in Twelve Countries
Author(s):

Mats Benner

Torben Bundgaard Vad

Publisher:
Oxford University Press
DOI:10.1093/0199240922.003.0009

The very generous, service‐oriented ‘social–democratic’ welfare states in Sweden and Denmark did consistently achieve higher levels of overall employment, extremely high levels of public services, greater equality in wages, and higher rates of female employment than either the ‘liberal’ or the ‘Bismarckian’ welfare states covered in this study. Following the liberalization of capital markets and errors of fiscal and monetary policy at the end of the 1980s, however, the Swedish economy went from an overheated boom into a deep recession, which then required significant cutbacks of social spending and public‐sector employment in the 1990s. By contrast, Denmark combined growth‐oriented macroeconomic policies with more flexible labour‐market regulations that allowed it to maintain the high level of public services while also increasing employment in private services. With the rapid recovery of the Swedish economy at the end of the 1990s, both countries are again successful in combining high competitiveness in the international economy with very high levels of social protection.

Keywords:   competitiveness, Denmark, employment, labour‐market regulations, liberalization, private services, public services, Sweden, wage equality, welfare state

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