The policies are particularly meant to prevent wage-price spirals by squeezing profit margins in the business sector.
All of this will enhance productivity growth at the aggregate level and freed labour resources facilitating the expansion of high-productive companies and industries.
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.
[3][4] The Rehn-Meidner Model was utilized in somewhat different shapes in Sweden, and partly in other Nordic countries, as well and proved successful in achieving its goals, as was shown in the prosperous time of the early post-war Golden Age of Capitalism.
In Sweden, the implementation of the Rehn-Meidner model in the 1960s and early 1970s was made possible by the centralization of collective wage bargaining.