Examining inequalities: from labour markets to social outcomes in Finland

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 21^st 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.