science

Rehn–Meidner model

Rehn–Meidner model is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Rehn–Meidner model rather than just read about it. In short: The Rehn–Meidner model is an economic and wage policy model developed in 1951 by two economists at the research department of the Swedish Trade Union Confederation (LO), Gösta Rehn and Rudolf Meidner. The four main goals to be achieved were: Low inflation Full employment High growth Income equality Overview The model is based upon an interaction between fiscal- and monetary policies, active labour market policies, a…

Key takeaways

Rehn–Meidner model belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Rehn–Meidner model to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Rehn–Meidner model from memory before moving on to harder problems.

Reference excerpt

The Rehn–Meidner model is an economic and wage policy model developed in 1951 by two economists at the research department of the Swedish Trade Union Confederation (LO), Gösta Rehn and Rudolf Meidner. The four main goals to be achieved were:

Low inflation Full employment High growth Income equality

Overview The model is based upon an interaction between fiscal- and monetary policies, active labour market policies, and solidaristic wage policy. The purpose is to simultaneously achieve all four goals of the model. Fiscal and monetary policies shall be restrictive in the medium term to ensure low inflation. The policies are particularly meant to prevent wage-price spirals by squeezing profit margins in the business sector. Solidaristic wage policy will threaten the profitability of companies and industries with low productivity. To survive, these companies have to raise productivity by rationalization and innovation or leave the market. All of this will enhance productivity growth at the aggregate level and freed labour resources facilitating the expansion of high-productive companies and industries. Their expansion is also stimulated by the solidaristic wage policy. Without this policy, wages would have been higher in dynamic companies and industries leading to larger wage differentials and higher inflation. In the Rehn-Meidner model, active labour market policy shall sustain full employment but also speed up the transfer of labour to dynamic companies and industries. Rehn argued for mobility-enhancing labor-market policies, including high unemployment benefits, based on a notion of "security by wings" rather than "security under shells." This aimed to make workers less dependent on a specific job, such that they would find new jobs as structural changes caused by productivity growth will reduce the need for workers in existing jobs. Rehn also recognized that high unemployment benefits may lead to longer job search periods, suggesting this would lead to more efficient labor markets by matching workers with jobs better fitting their skills and abilities; modern research has found evidence of this improved matching effect.

Decline and legacy In Sweden, by the mid-1960s, the Swedish Confederation of Trade Unions (LO) moved toward a preference for job security, and successfully lobbied the Swedish government to pass the Job Security Act of 1974. This effectively shifted Swedish macroeconomic policy from the Rehn-Meidner notion of "security by wings" to "security under shells." Further economic and political developments, including the oil supply crises of the 1970s and 1980s and increased international competition, pushed Sweden further from the Rehn-Meidner model and drew increasing focus onto pre-Keynesian economic-policy ideas.

See also Nordic model Flexicurity Economic democracy

References

Illustrations

Worked examples

Example 1 — a first encounter with Rehn–Meidner model

Start with the simplest possible case. Write down what Rehn–Meidner model claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Rehn–Meidner model before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Rehn–Meidner model ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Rehn–Meidner model

In research: Rehn–Meidner model appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Rehn–Meidner model in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Rehn–Meidner model is common in secondary-school and first-year university syllabi. It links to neighbouring topics Economic history of Sweden, Keynesian economics, Labour economics, so understanding it makes those chapters shorter.
In everyday life: Look for Rehn–Meidner model outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Rehn–Meidner model in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Rehn–Meidner model means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Rehn–Meidner model out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Rehn–Meidner model in simple terms?

Why does Rehn–Meidner model matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Rehn–Meidner model?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Rehn–Meidner model.