Coping with Regional Inequality in Sweden: Structural Change, Migrations and Policy, 1860-2000

Kerstin Enflo and Joan Rosés

No 29, Working Papers from European Historical Economics Society (EHES)

Abstract: In many countries, regional income inequality has followed an inverted U-shaped curve, growing during industrialisation and market integration and declining thereafter. By contrast, Sweden’s regional inequality dropped from 1860 to 1980 and did not show this U-shaped pattern. Accordingly, today’s regional income inequality in Sweden is lower than in other European countries. We note that the prime mover behind the long-run reduction in regional income differentials was structural change, whereas neo-classical and technological forces played a relatively less important role. However, this process of regional income convergence can be divided into two major periods. During the first period (1860-1940), the unrestricted action of market forces, particularly the expansion of markets and high rates of internal and international migrations, led to the compression of regional income differentials. In the subsequent period (1940-2000), the intended intervention of successive governments appears to have also been important for the evolution of regional income inequality. Regional convergence was intense from 1940 to 1980. In this period, governments aided the convergence in productivity among industries and the reallocation of the workforce from the declining to the thriving regions and economic sectors. During the next period (1980-2000), when regional incomes diverged, governments subsidised firms and people in the declining areas.

Keywords: Convergence; regional policy; neo-classical growth model; labour reallocation. (search for similar items in EconPapers)
JEL-codes: N93 N94 R11 R12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2012-10
New Economics Papers: this item is included in nep-geo and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Coping with regional inequality in Sweden: structural change, migrations, and policy, 1860–2000 (2015)
Working Paper: Coping with regional inequality in Sweden: structural change, migrations and policy, 1860-2000 (2012)
Working Paper: Coping with Regional Inequality in Sweden: Structural Change, Migrations and Policy, 1860-2000 (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hes:wpaper:0029

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