An Evaluation of the Swedish Active Labor Market Policy: New and Received Wisdom


About 3% of GNP is spent on government labor market programs
in Sweden, compared to 2% in Germany and less than 0.5% in the
U.S. In Sweden these programs include extensive job training,
public sector relief work, recruitment subsidies, youth programs,
mobility bonuses, and unemployment benefits. Using county-level
data, we provide new evidence that public relief workers displace
other workers, especially in the construction sector. Our review
of the previous literature suggests that job training programs
have small effects on wages and re—employment in Sweden, but
precise inferences are difficult because of small sample sizes.
We also investigate alternative reasons for the stability of the
Beveridge Curve in Sweden, and compare regional evolutions of
employment and unemployment in Sweden and the U.S. Lastly, we
present cross-country analysis for 1993 which, contrary to
studies that use earlier data, shows that the extent of a
country's active labor market programs is positively associated
with the national unemployment rate.

Year of Publication
Date Published
Publication Language
Citation Key
In Richard Freeman, Brigitta Swedenborg and Robert Topel (eds.), The Welfare State in Transition (Chicago:University of Chicago Press, 1996)
Working Papers