Markus Jäntti

Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States

This paper compares income inequality and income mobility in the Scandinavian countries and the United States during 1980–90. The results suggest that inequality is greater in the United States than in the Scandinavian countries and that this inequality ranking of countries remains unchanged when the accounting period of income is extended from one to eleven years. The pattern of mobility turns out to be remarkably similar, in the sense that the proportionate reduction in inequality from extending the accounting period of income is much the same. But we do find evidence of greater dispersion of first differences of relative earnings and income in the United States. Relative income changes are associated with changes in labor market and marital status in all four countries, but the magnitude of such changes are largest in the United States.

Income Poverty in Advanced Countries

This chapter reviews definitional issues that arise in assessing the extent of, and change in, poverty in western industrialized countries, including the choice of resource, level of poverty line and appropriate adjustments for the size and type of the income-sharing unit. The chapter also reviews the existing empirical evidence and presents estimates using the Luxembourg Income Study database. The first-order iimpact of the public sector suggests that countries with similar rates of market income poverty can have very different poverty rates once taxes and transfers have been received. Cross-national evidence on longitudinal aspects of poverty suggests that much remains to be learned about the patterns of intra- and intergenerational poverty mobility and their covariates.

Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?*

We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality - the Gini coefficient - was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work.

Inequality in Five Countries in the 1980s: The Role of Demographic Shifts, Markets and Government Policies

This paper uses Luxembourg Income Study data to examine levels of and trends in income inequality in Canada, the Netherlands, Sweden, the United Kingdom, and the United States. Inequality increased in Sweden, the United Kingdom, and the United States but did not increase in Canada and the Netherlands. Increased inequality of household heads earnings and increased shares of spouses earnings in family income account for much of the observed increases in income inequality. The public sector can, in general, be assigned a moderating effect on these changes. Demographic shifts are not assigned any major role in inequality changes. Copyright 1997 by The London School of Economics and Political Science

Equality of opportunity and the distribution of long-run income in Sweden

Equality of opportunity is an ethical goal with almost universal appeal. The interpretation taken here is that a society has achieved equality of opportunity if it is the case that what individuals accomplish, with respect to some desirable objective, is determined wholly by their choices and personal effort, rather than by circumstances beyond their control. We use data for Swedish men born between 1955 and 1967 for whom we measure the distribution of long-run income, as well as several important background circumstances, such as parental education and income, family structure and own IQ before adulthood. We address the question: in Sweden, given its present constellation of social policies and institutions, to what extent is existing income inequality due to circumstances, as opposed to ‘effort’? Our results suggest that several circumstances, importantly both parental income and own IQ, are important for long-run income inequality, but that variations in individual effort account for the most part of that inequality.

IQ and Family Background: Are Associations Strong or Weak?

Abstract For the purpose of understanding the underlying mechanisms behind intergenerational associations in income and education, recent studies have explored the intergenerational transmission of abilities. We use a large representative sample of Swedish men to examine both intergenerational and sibling correlations in IQ. Since siblings share both parental factors and neighbourhood influences, the sibling correlation is a broader measure of the importance of family background than the intergenerational correlation. We use IQ data from the Swedish military enlistment tests. The correlation in IQ between fathers (born 1951-1956) and sons (born 1966-1980) is estimated to 0.347. The corresponding estimate for brothers (born 1951-1968) is 0.473, suggesting that family background explains approximately 50% of a persons IQ. Estimating sibling correlations in IQ, we thus find that family background has a substantially larger impact on IQ than has been indicated by previous studies examining only intergenerational correlations in IQ.

Interindustry Wage Differentials and Unobserved Ability: Siblings Evidence from Five Countries

We examine the role of unobserved ability in explaining interindustry wage differentials. By using data on brothers, we account for unmeasured abilities shared by siblings. The data came from four Nordic countries and the United States. In the Nordic countries, only a moderate proportion of the variability in industry wages can be attributed to unobserved ability, while unmeasured factors explain as much as half of the U.S. industry-wage variation. Accounting for such differences, we show that the U.S. interindustry wage dispersion is similar with that in the Nordic countries.

The distribution of earnings in Finland 1971-1990

We document the distribution and changes in the distribution of earnings in Finland from 1971 to 1990. Use a large representative set of data, collected from the population censuses.

The effects of workplace downsizing on cause-specific mortality: a register-based follow-up study of Finnish men and women remaining in employment

Background: Experience of workplace downsizing (ie reduction in personnel) is common and may constitute a threat to public health in working populations. This study aimed to determine whether downsizing was associated with increased mortality among those remaining in the downsized workplaces. Methods: Prospective population registration data containing detailed socioeconomic and demographic information on 85 833 Finnish employees aged 35–64 years at the beginning of 1994 or 1993 followed up for cause-specific mortality for 8 years. One-year changes in workplace staffing levels were obtained from Statistics Finland records on workplaces. Results: There was no association between downsizing on any level (a 10–29%, 30–49% or 50–100% reduction in personnel) and increased all-cause mortality among those remaining in the downsized workplaces. No sex differences were observed in these effects among those who remained in the downsized workplaces, nor was a period of particular vulnerability immediately following the downsizing identified. Furthermore, no detrimental effects were observed for any particular cause of death studied. Conclusions: The results provide evidence that downsizing is not a significant determinant of excess mortality among those remaining in the downsized workplaces.

Chapter 10 – Income Mobility

We survey the literature on income mobility, aiming to provide an integrated discussion of mobility within and between generations. We review mobility concepts, descriptive devices, measurement methods, data sources, and recent empirical evidence.