How Social Democracy Worked: Labor-Market Institutions
Author(s)
Moene, Karl Ove; Wallerstein, Michael
Abstract
Social Democracy is on the decline. According to its critics, social democracy introduces too much equality, too much security, and too much employment, thereby causing the economy to function poorly. Conversely, this article argues that social democracy consists of a set of institutions and policies that work efficiently to reduce insecurity and inequality of income without large sacrifices in economic growth and stability. By examining the experience of Norway and Sweden during the heyday of social democracy, this article shows how labor market institutions were crafted to merge equality and efficiency. This discussion can also be applied to the question of why social democracy has declined in recent years.
