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Report: Gov't reforms led wages to rise less

Published lördag 1 juni 2013 kl 10.48
The researchers studied the period from 2007-2009, when it became more beneficial to work and less beneficial to be unemployed. Photo: Scanpix. Montage: Sveriges Radio.

Salaries in Sweden are lower than they otherwise would be, because of certain reforms made by the center-right government in 2007, according to a new report from the Uppsala-based Institute for Evaluation of Labour Market and Education Policy, which works under the Swedish Ministry of Employment.

"It's been a very controversial question," says Lars Calmfors, a professor in international economics at Stockholm University and one of the authors, adding that the government is not enthusiastic about saying that the reforms likely influence wages.

Wages are less than they would be, due to the earned income tax credit and a less generous system of unemployment benefits, Calmfors tells Swedish Radio News. He says if it were not for these reforms, wages would be in the neighborhood of three to four percent higher than they are today.

On the other hand, lower wages mean it is likely that fewer people are unemployed, says Calmfors.

The earned income tax credit gives workers more in their pockets without salary increases, and a less generous unemployment benefit system costs more, which makes it more acceptable for wages to go up less, according to the researchers.

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