September 2017

The Swedish labor market makes use of twelve different forms of employment subsidies involving three percent of the entire active work force.

In this paper Dennis Avorin, business analyst active within the EU, shows how the costs of these subsidies have become particularly pressing after the Swedish government in 2016 commissioned the Swedish Employment Agency to create 5,000 public relief jobs before the end of 2020. Research conducted in Sweden shows that while employment subsidies sometimes yield positive effects on an individual level—an obvious result—they also cause displacement of real jobs and individual lock-in effects.