Finland

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Overview of Trends of Economic Inequality in Finland

 

Has the dispersion of earnings been increasing in recent decades?Yes, top decile of earnings has risen from 165 per cent of median in 1980 to 176 per cent in 2008.
Has overall inequality increased in recent years?Yes, Gini coefficient for disposable income now around 6 percentage points higher than in 1990.
Have there been periods when overall inequality fell for a sustained period?Yes, overall inequality fell in early 1920s, in 1930s and from 1966 to end of 1970s.
Has poverty been falling or rising in recent decades?Poverty fell from 1971 to early 1990s, since then increased and in 2010 remains double the 1993 rate.
Has there been a U-pattern for top income shares over time?Not a classic U-shape: rise in share of top 1 per cent in 1950s.
Has the distribution of wealth followed the same pattern as income?Long-term fall in the share of top 1 per cent over much of twentieth century, followed by rise starting in mid-1990s.
Additional noteworthy featuresSubstantial movements in all aspects of distribution.

Sources and References

Sources for the historical data series:

Overall inequality: Gini coefficient of equivalised (EU scale) household disposable cash income from 1966 from website of Statistics Finland, Income and Consumption, Income Distribution Statistics; it should be noted that the figures for 1966-1981, 1987-1992, and from 1993 are not fully comparable and that the figures prior to 2002 use the OECD equivalence scale; earlier series for distribution among tax units based on tax records from 1920 to 1966 from Jäntti et al (2010, Table 8A.1), see also Berglund et al (1998) and Eriksson and Jäntti (1998).

Top income shares: Share of top 1 per cent in total gross income from WTID, based on work of Jäntti et al (2010); Series 1 is based on income tax records, Series 2 is based on the Income Distribution Survey.

Poverty: Percentage of individuals in households with equivalised (modified OECD scale) disposable income below 60 per cent of the median from website of Statistics Finland, Statistics Database, Income Distribution Statistics, At risk of poverty indicators, linked backwards at 1990 to estimates by Riihelä, Sullström and Tuomala (2003, Table A.4.1) using OECD equivalence scale.

Individual earnings: From OECD iLibrary, Employment and Labour Market Statistics, Gross earnings decile ratios, linked at 1980 to earlier series from Atkinson (2008, Appendix F, Table F.3).

Wealth: Estimates by Roine and Waldenström (forthcoming).

References:

  • Atkinson, A B, 2008, The changing distribution of earnings in OECD countries, Oxford University Press, Oxford.
  • Berglund, M, Jäntti, M, Parkatti, L and Sundqvist, C, 1998, “Long-run trends in the distribution of income in Finland 1920-1992”, Åbo Akademi University.
  • Eriksson, T and Jäntti, M, 1998, “Modelling the distribution of income and socio- economic variables: Finland 1949-1992”, paper presented at the 25th General Conference of the IARIW, Cambridge.
  • Jäntti, M, Riihelä, M, Sullström, R and Tuomala, M, 2010, “Trends in top income shares in Finland”, in A B Atkinson and T Piketty, editors, Top incomes: A global perspective, Oxford University Press, Oxford.
  • Riihelä, M, Sullström, R and Tuomala, M, 2003, “On recent trends in economic poverty in Finland”, Tampere Economic Working Paper 23, Department of Economics, University of Tampere.
  • Roine, J and Waldenström, D, forthcoming, “Long run trends in the distribution of income and wealth” in A B Atkinson and F Bourguignon, editors, Handbook of Income Distribution, volume 2, Elsevier, Amsterdam.