Explaining Equalization: Political Institutions, Market Forces, and Reduction of the Gender Wage Gap in Sweden, 1920-95

This article describes and explains the movement of female relative wages in Sweden from 1920 to 1995. During this period the aggregate gender wage gap shrunk from 41 to 15%. The bulk of the change took place in two periods: 1920 to 1940 and 1960 to 1980. With regard to determining factors, the analysis distinguishes between the period before 1960, when the rise in the female relative wage was the result of employment shifts, and after 1960, when wage structure change was the prime determinant. In the interwar period, women moved from low-paid to better-paid jobs, notably in trade and commerce and public services, as legal and administrative reforms opened up the public sector to women and educational reforms raised the educational level of the female labor force. The most rapid change in the gender wage gap occurred at a time when the solidaristic wage policy doctrine was embraced by the blue-collar trade unions and formed the basis of claims in wage negotiations. This study suggests, however, that excess demand for female labor rather than egalitarian ambitions of strong trade unions was the decisive factor behind the rapid reduction of the gender gap. Likewise, supply and demand shifts may well explain why the female relative wage stagnated from the late 1970s. These observations add up to the somewhat unorthodox conclusion that institutions were of primary importance for female relative wage development in the interwar period, while market forces played the leading role after 1960.