An Analysis of Wage-Earner Funds in Sweden: Distinguishing Myth from Reality

Abstract

This article analyses the performance of one of the most innovative ‘experiments’ in the extension of infiuence over the economic sphere, namely the Swedish wage-earner funds (WEFs). It examines the ability of the WEFs to pursue economic democratization in terms of macroeconomic, .nancial and democratic objectives. Results are mixed, with favourable .nancial and macroeconomic performance constrained by the limited size of the scheme, whereas employee infiuence through shareholding was inconsistent and of little significance. Nevertheless, WEF performance has legitimized collective investment funds as a potential instrument of economic democratization, while demonstrating that pursuit of social goals need not undermine allocative efficiency.