Search results

This chapter examines observed regional inequalities and centralization tendencies in Norway. Small, rural, municipalities experienced a favourable population development from 1970 to the mid-1980s. After this, the percentage population growth has been strongest in the largest municipalities/cities, and this tendency has accelerated during the last 10–15 years. Data post-1970 strongly support the reasonable hypothesis that population growth is positively related to centrality. The major source of changes lies within the labour market regions, whereas the changes between the regions are modest. Jobs have not become more centralized than households over the period.

A conceptual model is developed, offering a useful taxonomy of municipalities in three dimensions: the unemployment rate, the employment growth, and housing prices. This provides a classification that contributes to clarify the changes in the urban-rural divide. The discussion demonstrates that distinguishing between different categories is important, since different explanations of centralization and regional disparities call for different menus of policy instruments.

We study the relationship between population growth, unemployment rates, and employment growth in Norwegian municipalities, to distinguish between disequilibrium and equilibrium explanations of the situation in regional labour markets. At a national level our results indicate that neoclassical adjustments dominate weakly over amenity-based mechanisms. However, results from many regions support the hypothesis that amenity-based adjustments are dominant for municipalities within a labour market region. One possible explanation is that the diversity in job opportunities is considered as an amenity. A thicker labour market is better fit to meet the demand of workers with specific qualifications.

I present a model where firms and workers set wages above the market-clearing level. Unemployment is thus generated by their exercise of market power. Because both the labor and product markets are imperfectly competitive, market power in the labor market interacts with market power in the product market. This interaction sheds new light on the effects of policy interventions on unemployment and growth. For example, labor market reforms that reduce labor costs reduce unemployment and boost growth because they expand the scale of the economy and generate more competition in the product market.

This chapter analyses the recovery of the Danish economy from the crisis of the 1980s, its elevation to a bit of an ‘economic miracle’ or at least an ‘employment miracle’ from 1995 to 2005 and its subsequent decline during the financial crisis, which revealed more long-standing problems that precluded a quick recovery. The solution of Denmark's structural balance of payment problems in the early 1990s paved the way for long-term prosperity, and Denmark managed the challenges of globalisation and deindustrialisation almost without social costs. However, an accumulation of short-term policy failures and credit liberalisation facilitated a credit and housing bubble, a consumption-driven boom and declining competitiveness. In broad terms, the explanation is political; this includes not only vote- and office-seeking strategies of the incumbent government but also ideational factors such as agenda setting of economic policy. Somewhat unnoticed – partly because of preoccupation with long-term challenges of ageing and shortage of labour – productivity and economic growth rates had slowed down over several years. The Danish decline in GDP 2008–2009 was larger than in the 1930s, and after the bubble burst, there were few drivers of economic growth. Households consolidated and were reluctant to consume; public consumption had to be cut as well; exports increased rather slowly; and in this climate, there was little room for private investments. Financially, the Danish economy remained healthy, though. Current accounts revealed record-high surpluses after the financial crisis; state debt remained moderate, and if one were to include the enormous retained taxes in private pension funds, net state debt would de facto be positive. Still, around 2010–2011 there were few short-term drivers of economic growth, and rather unexpectedly, it turned out that unemployment problems were likely to prevail for several years.

Job loss and long-term unemployment can have pervasive negative impacts on well-being. At its most extreme, unemployment is accompanied by feelings of shame, humiliation, insecurity, and worthlessness, as well as damage to cherished identities and narratives of self. Scholars have investigated how the unemployed attempt to repair these damaged identities, but little is known about how network members participate in the identity reconstruction process. Social support has been shown to ameliorate the negative psychological effects of unemployment, but studies have also found that the unemployed are reluctant to ask for assistance and often perceive network members as a source of stress rather than as a source of support. To understand why social support can be experienced both positively and negatively by the unemployed, we draw upon 84 in-depth qualitative interviews with men and women who experienced unemployment during the extended economic downturn associated with the Great Recession. We find that social support ameliorates unemployment when it bolsters identities important to recipients, and exacerbates unemployment when it undermines such identities. We also show how the unemployed respond to identity-threatening support: by avoiding it, rejecting it, or reframing it as reciprocity. Our analysis contributes new insights into the relationship between social support and identities, as well as a deeper understanding of the noneconomic costs of the slow economic recovery following the Great Recession.

The new economic-policy regime in Sweden in the 1990s included deregulation, central-bank independence, inflation targets and fiscal rules but also active labour market policy and voluntary incomes policy. This chapter describes the content, determinants and performance of the new economic policy in Sweden in a comparative, mainly Nordic, perspective. The new economic-policy regime is explained by the deep recession and budget crisis in the early 1990s, new economic ideas and the power of economic experts. In the 1998–2007 period, Sweden displayed relatively low inflation and high productivity growth, but unemployment was high, especially by national standards. The restrictive monetary policy was responsible for the low inflation, and the dynamic (ICT) sector was decisive for the productivity miracle. Furthermore, productivity increases in the ICT sector largely explains why the Central Bank undershot its inflation target in the late 1990s and early 2000s. The new economic-policy regime in Sweden performed well during the global financial crisis. However, as in other OECD countries, the moderate increase in unemployment was largely attributed to labour hoarding. And the rapid recovery of the Baltic countries made it possible for Sweden to avoid a bank crisis.