Scholarly Comments on Academic Economics

Is the Swedish Welfare State A Free Lunch?

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Abstract

In his book Growing Public (Cambridge University Press), Peter H. Lindert argues that the welfare state is a “free lunch”, i.e. has no negative effect on growth, and he uses Sweden to explain this finding, which he calls the free lunch puzzle. In this comment, I claim that Lindert misrepresents Sweden when it comes to work incentives for the poor, employment of women, and employment of the elderly, and that he does not pay sufficient attention to the many reforms undertaken in Sweden since the late 1980s. I conclude by suggesting that the surprising resilience of the Swedish welfare state can be explained by increasing economic freedom.

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Volume (Issue)
Pages
210-235
Published
JEL classification
H53, I38
Keywords
Sweden, USA, the welfare state, female employment, work incentives, economic freedom
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