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Digitalization, Immigration and the Welfare State

Mårten Blix

The Swedish welfare state finds itself in the middle of two major upheavals: The impact of technology and immigration. Having taken in more refugees per capita than most other countries, the pillars of the welfare state are being shaken. Digital technologies are set to strengthen already existing trends towards job and wage polarization. This book explores how these trends are more pronounced due to the rigidity of the labor market and the comprehensiveness of tax-financed welfare services.
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Chapter 3: The labor market in transition

Mårten Blix


Not a single member state managed to reverse the trend of growing temporary employment among the young. (Werner Eichhorst, Paul Marx and Caroline Wehner)1

The Swedish labor market and its institutions are intimately connected to the “Swedish Experiment”.2 This chapter is devoted primarily to those parts that pertain to new and existing trends that have implications for the future direction of the welfare state.

Perhaps the successful transformations of the Swedish Model discussed in the previous chapter create the impression that all is well. The generous system of welfare and high taxes has once been compared to a bumble bee, which, despite its large body and small wings, manages to fly rather well.3 Maybe Sweden has finally managed to correct the excesses of the 1970s and 1980s and created a functional balance between market incentives and security?4 Sweden has strong public finances, a low unemployment rate by European standards and is often ranked among the top five information and communications technology (ICT countries).5 One perception of Sweden could be that the bumble bee continues to fly – and rather well. Is it right?

I do not want to downplay the extent to which the welfare state has managed to reinvent itself since the 1990s, quite the contrary. But the poor economic performance in the 1970s and 1980s does injustice to the bumble bee, as the country was in fact on an unsustainable path.

It is a fair assessment that...

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