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Examining inequalities: from labour markets to social outcomes in Finland

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  • Tuuli Paukkeri
  • Terhi Ravaska
  • Marja Riihelä

Abstract

Finland is known for low income inequality by international comparison. In this paper we provide a long‐run perspective on inequalities in Finland, and show that inequality is higher in the 21st century compared with many previous decades. We discuss the drivers of inequality in more detail, focusing on wages, earnings, employment and education, and also social outcomes such as partner‐finding and family formation in the working‐age population. The collective wage‐setting system is a likely contributor to the relatively low and stable wage and earnings inequality among working indviduals. However, women fare worse in the labour market than men, despite having a higher education level on average. We also find that individuals who are out of work or have low education have a lower probability of finding a partner, indicating that social inequalities are linked with those in the labour market. Finally, we discuss the importance of redistribution as well as changes in tax legislation that have contributed to an increasing concentration of capital income, which has been an important factor in increasing households’ disposable income inequality.

Suggested Citation

  • Tuuli Paukkeri & Terhi Ravaska & Marja Riihelä, 2024. "Examining inequalities: from labour markets to social outcomes in Finland," Fiscal Studies, John Wiley & Sons, vol. 45(2), pages 225-241, June.
    • Handle: RePEc:wly:fistud:v:45:y:2024:i:2:p:225-241
    DOI: 10.1111/1475-5890.12369
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    References listed on IDEAS

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    1. Sullström, Risto & Riihelä, Marja & Suoniemi, Ilpo, 2008. "Tax Progressivity and Recent Evolution of the Finnish Income Inequality," Discussion Papers 460, VATT Institute for Economic Research.
    2. Jaakko Kiander & Pekka Sauramo & Hannu Tanninen, 2011. "Finnish incomes policy as corporatist political exchange: development of social capital and the social wage," Transfer: European Review of Labour and Research, , vol. 17(4), pages 515-531, November.
    3. Marja Riihelä & Risto Sullström & Matti Tuomala, 2010. "Trends in top income shares in Finland in 1966- 2007," Working Papers 1078, Tampere University, Faculty of Management and Business, Economics.
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