cut throught economies versus scandanavia.pdf

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Figure 2: Patent …lings per million residents at domestic o¢ ce. Source: World Intellectual
Property Organization.
have been increasing over the last three decades. Figure 4 depicts the evolution of the ratio of
90th and the 10th percentiles of the income distribution in these countries, and shows that the
United States is both more unequal than Finland, Norway, Sweden and Switzerland, and that
this gap has been increasing since the 1980s.7 Income inequality at the top of the distribution
has also been exploding in the United States, with the top 1% of earners capturing over 20% of
total national income, while the same number is around 5% in Finland and Sweden (Atkinson,
Piketty and Saez, 2011).
The economic and social performance of Finland, Sweden and Switzerland, as well as several
other European countries, raise the possibility that the US path to economic growth is not the
only one, and nations can achieve prosperity within the context of much stronger safety net,
more elaborate welfare states, and more egalitarian income distributions. Many may prefer
to sacri…ce 10 or 20% of GDP per capita to have better public services, a safety net, and a
more equal society, not to mention to avoid the higher pressure that the US system may be
creating.8 So can’t we all— meaning all nations of the relatively developed world— be more like
Scandinavians? Or can we?

Data from the Luxembourg Income Study (2011). The percentiles refer to the distribution of household
disposable income, de…ned as total income from labor, capital and transfers minus income taxes and social
security contributions. See, for example, Smeeding (2002).
Schor (1993) was among the …rst to point out the comparatively much greater hours that American workers
work. Blanchard (2007) has more recently argued that Americans may be working more than Europeans because
they value leisure less.