Rich and poor in the Nordic welfare states

Johan Fritzell, johan.fritzell@chess.su.se

Professor of Sociology, CHESS, Stockholm University/Karolinska Institutet

Research director, Institute for Futures Studies, Stockholm

To be presented at “Inequality and the Nordic welfare model” seminar,

THL-auditorium, Helsinki 2011-11-07

Rich and poor in the Nordic Welfare States: Table of content

• Background: Two key outcomes of the Nordic model

– Low income inequality

– Low poverty rates

• Are the Nordic countries still a family of their own in these respects?

– More or less similar

– More or less distinct from other

Rich and poor in the Nordic Welfare States: Table of content (2)

• „New‟ and „old‟ social risks

– Nordic countries especially successful vs. old risks

– Also new social risk categories?

• Top income trends

– For whosoever hath, to him shall be given

– Is that important?

Johan Fritzell, Olof Bäckman and Veli-Matti Ritakallio: “Income inequality and poverty: do the Nordic countries still constitute a family of their own?”; in Changing Social Equality, Policy Press

Johan Fritzell, ”Fattig och rik i Sverige”; in Utanförskap, Dialogos förlag & Institutet för Framtidsstudier

+ Of course a lot of other sources

Data + income and poverty measurements

• Data sources: – National data sources,

– Luxembourg Income Study,

– EU-SILC

• Income: – Equivalised disposable income (mostly)

• Poverty: – Income-based

– 60% per cent threshold

Overall income inequality and poverty trends

• I. Income inequality trends

– Yearly changes ~mid80s to late00 within Nordic countries (incl. Iceland)

• II. Poverty trends and comparisons with Non-Nordic countries

– ~mid90s to ~mid00s

25

50

75

100

125

150

175

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

GIN

I 1995 =

100

Sweden

Finland

Denmark

Norway

Iceland

Sweden

Finland Denmark Iceland

Norway

Changes of income inequality (Gini) in the Nordic countries from 1985 to 2008. The Gini has been set to 100 in 1995 for each country. Source: Fritzell, Bäckman, Ritakallio, 2011; Data National income distribution

surveys

At-risk of poverty 1995 and 2005. Data source: The Luxembourg Income Study

0

5

10

15

20

25

30

Percent

1995 2005

Poverty rates and profiles in old and new social risk categories

EU-SILC data (2007)

New risk groups: young adults and immigrants

At-risk-of-poverty (%) in 2007, Old risks: Children, large families, single mothers, old age. Source: EU-SILC

0

5

10

15

20

25

30

35

40

45

DK FI IS NO SE DE IT NL UK EUR

17

Children Large families Single mothers Old age

At-risk-of-poverty (%) in 2007, New risks: young single adults and migrants (born inside-outside EU)

Source: EU-SILC

0

10

20

30

40

50

60

DK FI IS NO SE DE IT NL UK EUR

17

Young single adults Immigrants - inside EU Immigrants - outside EU

At-risk-of-poverty migrants born outside EU relative to country

average(=1) Source: Fritzell, Bäckman & Ritakallio 2011; Data: EU-SILC 2007

0,5

1

1,5

2

2,5

3

Belgien

Finlan

d

Sverig

e

Luxem

burg

Holland

Norge

Danm

ark

Frankr

ike

Öster

rike

Grekla

ndIrl

and

Italie

n

Spanien

Storb

ritan

nien

Portugal

For whosoever hath, to him shall be given: Trends among high income earners

0

1

2

3

4

5

6

7

8

9

10

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Top 1% income share in Sweden between 1991 and 2008. Equivalent disposable income

Top 1% income share in Finland between 1980 and 2004. Source: Jäntti, Riihela, Sullström, and Tuomala

Increases at the top of the tops: The Icelandic example Source: Stefan Olafsson and Arnaldur Solvi Kristjansson, 2010

For whosoever hath, to him shall be given: Is it important?

For whosoever hath, to him shall be given: Is it important?

• The empirical facts

– Similarity in trends but of course, Nordic countries are much more equal but not immune to the trends

• Legitimation

– The possibilities for universalism

– The possibilities for high quality public services

– The possibilities for national politics

• Can income inequalities at the top spread to injustices in other spheres?

For whosoever hath, to him shall be given: Is it important?

• From an Anglo-saxon perspective:

• “I believe that the recent concentration of wealth at the very top of the income distribution in the United States (and other English speaking countries) is a serious threat to well-being, through its possible long-term effects on health, education and democracy”

• Angus Deaton (2011)

Conclusions

• Many similarities within the Nordic countries in trends and many subgroup-analyses

• Increasing income inequalities and poverty rates in the Nordic countries also lately. The Nordic countries less different thereby

• The Nordic countries not immune against the increases of top incomes

• The Nordic countries seem to have difficulties (less ambitious?) in fighting poverty among new social risk groups

• Kiitos - Tack för er uppmärksamhet!

• Johan Fritzell

johan.fritzell@chess.su.se