Study on Unemployment in Sweden vs the US

Right-wingers have countered social democratic citation of the Swedish model as a success by claiming that Sweden has high but hidden unemployment – a claim that recently helped defeat the Swedish social democrats.

True, active labour market policies do provide a fair bit of government subsidized employment in Sweden, but, on the other hand there is a lot of hidden unemployment in neo liberal countries with seemingly low unemployment rates as well.

In his take on the issue, John Schmitt of the CEPR dissects a McKinsey and Co. study of Swedish unemployment, and calculates that the US has a similarly high “real” unemployment rate if the same expansive methodology is applied – and an even higher unemployment rate if adjusted for the prison population. As he notes, there is a lot of “subsidized” employment in the US as well if once includes working poor beneficiaries of the Earned Income Tax Credit.


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