Nordic Economic Policy Review 2018

Increasing Income Inequality in the Nordics

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The contributions document how income inequality in the Nordics in various dimensions have increased over recent decades. These developments are put in an international context. Developments in Denmark, Finland, Norway and Sweden are compared. Important aspects analysed in detail are overall inequality of both market and disposable incomes, the redistribution through the tax and transfer system as well as through the provision of government welfare services, the importance of demographic factors, the developments of both relative poverty and top income shares, and gender inequality.



Demographic Change and Inequality Trends in the Nordic Countries

We compare how ageing, assortative mating, an increasing share of students, a shift towards more single and childless couple households, and immigrant inflows have influenced inequality in the Nordics from 1995 to 2013 by re-weighing subgroups of the population by their population shares in 1995 to construct counterfactual income distributions. We find that these factors combined have increased disposable income inequality in all the Nordic countries, but to a different extent and through different mechanisms. The strength and direction of demographic change, within- and between-group inequality and the responsiveness of redistribution all play a role.


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