See the last part here, and read on for the ending to this summary!

Chapter 8: Three Post-Industrial Employment Trajectories

Theories of Service-Employment Growth

A clear tendency in developed countries is that innovations and automation in industrial labor advance productivity, making industrial goods cheaper. This, coupled with a continued increase inaverage income, means there is a clear shift over time towards spending on services. A key question is whether the jobs lost to higher productivity (you need less workers to make the same amount of stuff, after all) will be made up for in an expanding service sector. Economist William Baumol proposed the idea of Baumol’s cost disease: as productivity…

Today, we’ll be continuing the summary of this book by discussing the welfare state in the employment structure. In the previous parts, we categorized three welfare regime types, and looked at what political powers may have caused them. But how to these types influence other economic variables?

This article will round out the first part of the Esping-Andersen’s book from 1990. You can find the previous part here. Enjoy!

Chapter 3: The Welfare State as a System of Stratification

Many sweeping generalizations about welfare are incorrect. For example, you might hear someone argue that it lessens class divisions. But not all welfare is created equal: some welfare policies lessen class divides, but some enhance them. And the redistributive effect of even the same amount of welfare spending can vary greatly. Mirroring the regime types, there are 3 “ideal types” of welfare stratification.


The origins of conservative stratification comes from two related phenomena: etatism and corporatism. Etatism, pioneered…

This will be the first in a series of articles about the excellent “The Three Worlds of Welfare Capitalism” by Gøsta Esping-Andersen, first published in 1990. It focuses on 18 developed Western countries, with extensive data covering decades. Enjoy!


The 1960’s and 1970's saw dramatic expansion and empowerment of welfare states. No longer was welfare a marginal role of the state: instead, it reshaped how society and the economy was organized. But different welfare structures shaped countries differently with regard to decommodification, stratification, and employment. Crucially, these effects cannot be determined just by looking at the amount of welfare spending…

Today, I’ll be summarizing the classic “Uncertainty and the Welfare Economics of Medical Care” by Kenneth Arrow. I think it provides a powerful and commonsense explanation of why medical care is different from most other goods and services. My personal notes will be in brackets [like this].

I. Introduction, Scope and Method

First, it should be noted that we’re focusing on medical care specifically here, rather than health in general. Many things affect health beyond just medical care. We’ll be comparing it to the norm in economics of a product sold under perfect competition, where firms don’t have the individual power to set prices, there…

Hey everyone, hope all is well! Today I’ll be summarizing this piece by Douglass A. Hibbs Jr. and Hakan Locking from 2000, analyzing how different union policies in Sweden effected productivity and growth. Swedish wage bargaining was centralized and produced very equal outcomes, but broke down somewhat in 1983. This allows us to examine how this breakdown effected certain economic measurements. My own notes, as usual, will be in brackets [like this].

1. Introduction

From 1956–1983, the Swedish Trade Union Confederation (abbreviated LO in Swedish) covered and negotiated for basically all blue-collar workers, while the Swedish Federation of Salaried Employees in Industry…

Hey there folks! Today, I’ll be examining some economic theory from this paper by Jonas Agell and Kjell Erik Lommerud from 1993. It models solidaristic wage bargaining (SWB): the practice by sectoral unions of bargaining pay equality not just within or across firms, but across industries and sectors as well. This practice was especially strong in the height of social democratic power in the Nordics in the 50’s to 80’s, and brought tremendous gains. My own notes will be in brackets [like this]. Let’s get started!

Egalitarianism and Growth

I. Introduction

Post-World War 2, Scandinavia had tremendous growth coupled with very low unemployment. Strong, centralized…

Welcome back! Today, I’ll be summarizing this interesting paper by Erling Barth, Alex Bryson, and Harald Dale-Olsen. I chose it because it examines Norway’s union system, where unions are organized by sector and coordinate their bargaining, as compared to the US’ uncoordinated and establishment-level unions. The former, I believe, has many positive effects over the latter, and is less examined. Remember, my comments are in brackets [like this]!

1. Introduction

This study exploits the change in the price of union membership in Norway from 2001–2012, aiming to find a relationship between productivity and union membership rate. It’s not immediately clear from theory…

Today, I’ll be summarizing this paper by Henrik Jacobsen Kleven. As usual, my notes will be in brackets [like this]. Let’s jump right in!


As many reading this well know, Scandinavian countries (Denmark, Norway, and Sweden here) face famously high tax rates. Top tax rates are in the range of 60–75% [and kick in at much lower incomes, as shown below].

[Taxes are high for lower incomes too, with Sweden having a VAT of 25% and a flat payroll tax of over 30%, for example).] …

Let’s review. As I’ve discussed before, a key parameter when discussing taxes is the elasticity of the tax base to the tax rate. For example, if you tax people’s income more, they will work less. But this is just one example of a larger idea: barring tax avoidance, if you tax something, the cost of supplying it goes up, so less of it will be supplied. The supply-side elasticity simply measures how much less of it is supplied.

I proved last time that the equation for a revenue-maximizing flat tax (like is used in value-added taxes or property taxes) is…

Jacob Keegan

Economics and welfare knower.

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