The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival

The Rehn-Meidner model recommends active labor-market policies, tight macroeconomic policies and solidarity wage policies to combine price stability, growth, full employment and equity. The golden age for the model in Sweden began in the late 1950s and ended in the early 1970s. The following postwar period was characterized by obvious deviations from the Rehn-Meidner model but also by the survival of parts of the model. The rise and partial fall of the model in Sweden is explained by changes in political institutions, wage bargaining systems, trade union power, economic policy makers and economic thinking and by experiences of economic policy in the past. However, there is weak evidence that the departure from the Rehn-Meidner model is ultimately explained by globalization and new technologies.