The Nordic model is about more than high taxes

by Nima Sanandaji

How can Scandinavians tax so much? This is the question that Henrik Jacobsen Kleven, professor of Economics at London School of Economics, explores in a new paper. The author gives a number of valuable insights. To begin with, Scandinavian welfare policies are not as progressively tilted towards income distribution as foreign observers might assume. Much of public spending is “subsidization of goods that are complementary to working”. This means that governments pay for programs such as care of children and the elderly, so that working age individuals can focus more effort on their careers.

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