Enhancing the Effectiveness of Public Expenditure

The Swedish welfare state comprises a fine-mesh social insurance safety net, along with the provision of a broad range of free or almost free public services. This inevitably implies extensive public outlays and a considerable amount of redistribution of income and consumption. Despite the economic burden that these choices impose on the tax-paying public (see Chapter IV), this broad approach seems to enjoy widespread support. Nevertheless, given the challenges facing the country (see Box 4), it is necessary to consider what changes to the institutional framework governing public expenditures and to the design of public policies might help to ease the stress arising from financing the welfare state in the future.