More or less equality? : Facts, debates, and policies related to the Nordic model

This is a self-archived version of an original article. This version may differ from the original in pagination and typographic details. Author(s): Title: Year: Version: Copyright: Rights: Rights url: Please cite the original version: CC BY-NC-ND 4.0 https://creativecommons.org/licenses/by-nc-nd/4.0/ More or less equality? : Facts, debates, and policies related to the Nordic model © 2021 the Authors Published version Roikonen, Petri; Ojala, Jari; Eloranta, Jari Roikonen, P., Ojala, J., & Eloranta, J. (2021). More or less equality? : Facts, debates, and policies related to the Nordic model. In A. Koivunen, J. O. Ojala, & J. Holmén (Eds.), The Nordic Economic, Social and Political Model : Challenges in the 21st Century (pp. 62-90). Routledge. https://doi.org/10.4324/9780429026690-4 2021 4 More or less equality? Facts, debates, and policies related to the Nordic model Petri Roikonen, Jari Ojala, and Jari Eloranta The topic of income inequality has become a new nexus of research among historians and social scientists recently.1 Piketty (2014) has famously argued: Inequality is shaped by the way economic, social, and political actors view what is just and what is not, as well as by the relative power of those actors and the collective choices that result. It is the joint product of all relevant actors combined. Given that redistribution is a core element of the Nordic model and understood as key to the development of social trust and cohesion, all debates about social and cultural polarization are also debates about economic inequalities and the possible policy choices related to those issues. Moreover, in public and political discussion– in Finland especially– income inequality is in many cases conflated with various other forms of inequality in the society. This crucial difference in what is meant by scholarly versus political discourses at large can often lead to inexact policy debates and solutions. In this chapter we concentrate, mainly, on exploring the specific concepts of income inequality that are measurable and definable, especially what they tell us about this form of inequality in Finland and Sweden as our case studies. In addition, we will contextualize these cases through comparisons with the other Nordic countries as well as other polities. However, as we can see from our discussion here, there are striking differences, especially in the public discussions as measured by newspaper articles both in Finland and in Sweden, whether the discussion is focused on societal inequality in broader terms or, more specifically, on income inequality and its ramifications. In this chapter, we will discuss the period from the late 1960s to the recent years, thus examining how income inequality has developed in Finland and Sweden, how it has been debated both in research and in public discussions, and whether these discussions can be linked to changes in welfare state creation as well as redistribution trends. This is an interesting period, since welfare states emerged in force during this era, thus offering new policy solutions to various forms of inequality, but it also saw a widespread challenge to welfare states in the policies of Ronald Reagan and Margaret Thatcher, as well as deregulation of many European economies, DOI: 10.4324/9780429026690-4 More or less equality? 63 including Finland and Sweden. Finally, we also want to touch on the issue of what kind of data should and could be used to examine these issues, especially from the perspective of income inequality. However, we have to clarify one caveat of our chapter in the outset. We will not analyze the actual policy debates in the Finnish and Swedish political arenas, since that would require a chapter of its own (and they are, to a certain extent, covered in the other chapters of the book). Instead, we more broadly focus on the potential linkages in the evolution of Nordic welfare and tax policies. This chapter is organized as follows; we will first introduce data and methods (Data and methods: research, discourses, and policies) and examine the facts (Economic inequality: what do we know) – that is, what do socio-economic data tell us about income inequality over time– and we will explore certain debates over how they are measured as well. Next, we analyze the research, especially on Finnish economic policies and inequality over time, as well as discourses on these topics in the media (Discourses on income inequality, mainly newspapers) in Finland and Sweden, to be followed by a discussion of the policies adopted (Nordic redistribution trends and welfare impacts). Finally, we will conclude with a broader discussion of the development trends and future prospects. Data and methods: research, discourses, and policies Our first goal here is to review some of the quantitative evidence, especially the various socio-economic indicators, to evaluate trends in polarization from the Nordic perspective. As shown recently via global comparisons by Leandro Prados de la Escosura,2 the global polarization in terms of social well-being has declined steadily since World War I. Similarly, as discussed by Jan Luiten Van Zanden etal. (2014), global well-being on the whole has increased dramatically since the 19th century. Most of the indicators used in any analysis on wellbeing are correlated with GDP per capita, which is typically viewed as a key measure worth looking at when discussing inequality, similar to wealth. Such indicators, however, only tell part of the story of societal development and polarization, and here we will look at a limited number of indicators of Nordic development during the last century or so. Our working hypothesis is that the story is similar with all of the Nordic countries; although, here the main focus in the comparisons is on Finland and Sweden. However, even a cursory look at the data tells us that while the trends have been visible, there are differences between what we are measuring and between the countries as well. The Nordic countries did not necessarily form a coherent block in economic and social terms. Finally, the Nordic countries today have lower levels of inequality in its various forms than most Western nations. The aim of this study is to analyze how research was setting an agenda to public debates, and how research and discussions affected the public policies. First, we characterize the main trends and findings in the international and national inequality research. Second, here we focus on some of the key Finnish 64 Petri Roikonen et al. research papers and reports on inequality as well as the major Finnish (Helsingin Sanomat (HS)) and Swedish (Dagens Nyheter (DN)) newspapers to gauge the dimensions of debates. Furthermore, we analyze some of the economic prognostications produced in the debates by analysts and pundits in the public sphere, namely through the lens of a key newspaper. In essence, we intend to analyze their views on future economic outlook as well as economic and societal polarization. We are using here mostly published sources and reports, and major newspapers via their digital collections, using keyword searches. Our initial hypothesis was that economic (or social) data and published research would not necessarily be reflected in these debates, and that national debates can be distorted by groupthink and lack of perspective. However, we had to refine our thinking based on the results, as the public discourse did in fact reflect some of the broader themes arising from scholarship, and on occasion some of the key studies made enough waves to penetrate the public discourse. Third, we analyze the “changes” in policies vis-à-vis “facts” (research) as well as the debates (discourses). The main policy aspects of this study relate to redistribution policies through taxation and social transfers as well as education and other welfare state policies. We argue that the focus on facts/debates/change is a valuable tool to understand these processes. The so-called RDP model (researchdiscourses-policies model) is the theoretical model of our study (see Figure4.1). Research DiscoursesPolicies Figure 4.1 The theoretical model of the RDP framework. More or less equality? 65 Economic inequality: what do we know? Top income shares A certain amount of inequality is unavoidable in modern capitalist societies and economies– yet an increase in inequality may in time lead to severe challenges, even societal crises. European history alone has proved this time and again, with bloody revolutions and uprisings. Yet income inequality has also been a component of the most dramatic economic transitions in history, such as the industrial revolutions and globalization waves. In the recent political and scholarly debates, income inequality has become one of the key concepts to explore and to evaluate current-day problems from the perspective of historical development paths, and whether, for example, broad societal changes like welfare policies can temper tendencies toward inequality in its various forms. In the very long run, there are relatively consistent series on economic inequality only for the top income shares (taxable incomes).3 Economic inequality, measured on the basis of incomes or wealth, decreased in Western countries in the first part of the 20th century.4 The inequality continued to decrease until circa the year 1980 (Figure4.2). The phase of shrinking inequality was reversed after, first in the Anglo-Saxon countries and later in the Central Europe as well as in the Scandinavian countries. Thus, the trend has been toward lesser inequality in the 20th century; however, the experiences of sharp increases of inequality during the last decades have partly reversed that process. For example, in the United States the current-day inequality has reached the levels similar to the first decades of the 20th century. On the other hand, there are countries, for example, Denmark and the Netherlands, that have not experienced the sharp increasing tendency almost at all. Overall, the Anglo-Saxon countries have experienced much sharper increases in inequality when compared with the Central Europe and Nordic countries. Gini coefficients Next, we can further characterize the patterns of (income) inequality in the recent decades utilizing household survey data (Figure4.3). The inequality measured by the disposable incomes at the household level (aka including received and paid transfers and payments) has relatively similar patterns compared with the top income shares calculated from tax statistics seen in Figure4.2 (taxable incomes). The income inequality has increased significantly starting from the early 1990s to around year 2007, especially in Finland and Sweden. Furthermore, it is noticeable that Sweden was more unequal when compared with Finland in terms of income inequality after the year 1990. This might be explained with the higher capital gains in Sweden. After 2007, the perspective on the Finnish economic inequality depends on the indicators utilized: stagnated (absolute income inequality), decreased slightly (consumption inequality and income inequality), or increased (wealth inequality).5 66 Petri Roikonen et al. .05 .1 .15 .2 .25 .3 Share 1860 1880 1900 1920 1940 1960 1980 2000 Denmark Norway Sweden Finland, −1910 Finland, 1920− .05 .1 .15 .2 .25 .3 Share 1860 1880 1900 1920 1940 1960 1980 2000 France Germany USA United Kingdom Netherlands Finland, −1910 Finland, 1920− Figure 4.2 Top 1percent income share in Scandinavia (a) and in the Central Europe as well as Anglo-Saxon countries (b). Sources: Finland, 1865–1910 (Roikonen& Heikkinen 2018), Finland, 1920–2004 (Jäntti etal. 2010), Germany 1876–1880, USA 1870–1910 (Lindert& Williamson 2016, 173), other (WID database). More or less equality? 67 20 25 30 35 40 45 Gini coefficient 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Finland Sweden Denmark Norway France Germany NetherlandsUSA United Kingdom Figure 4.3 Gini coefficients for disposable incomes from 1965 to 2010. Sources: Finland (Official Statistics of Finland 2019), Sweden (Statistics Sweden 2019), Denmark and the United Kingdom (LIS) (Milanovic 2016). Other (The Chartbook of Economic Inequality 2019). Note: Swedish and Finnish data include capital gains. The income inequality estimates from tax and survey data are slightly different, due to three obvious reasons: first, the concept of income is different, since the taxable incomes do not include taxes and transfers as well as other non-taxable income sources; second, the inequality measurements are different– that is, the top-income share versus Gini coefficient; and, third, the tax statistics are based on individual records, whereas the surveys were collected at the household level.6 The disparities with data raise questions about how we should handle these types of issues– especially since these types of subtle methodological and analytical differences are not obvious to politicians and the lay public– and which sources we should prefer to use. According to Burkhauser etal. (2012), the household surveys have severe problems in capturing the top incomes due to under coverage, underreporting, and top coding. In addition, there are many other sources of incomes that are not captured (such as capital gains in the USA). However, the tax statistics have limitations as well. The tax records are hampered by a changing concept of taxable income (e.g., deductions, preferences between income sources). Furthermore, tax evasion is a problem, especially among the top-income groups. In addition, the poorest people are missing in the tax filers’ data. Regardless of these differences, according to 68 Petri Roikonen et al. empirical studies,7 the top-income shares arising from tax data are relatively good proxies for overall inequality and can be a useful substitute for other measures of inequality. Both types of inequality data and measures have possible pitfalls, and according to Alvaredo (2011), the survey-based Gini coefficients should be corrected by using the more complete top-income data from tax records. Therefore, some National Statistical Offices have decided to utilize registers to impute incomes in the income distribution surveys, including Statistics Finland; however, many statistical offices still rely on the answers presented in the interviews. Finland and Sweden in comparison As noted before, Finland and Sweden, as well as many other countries, have experienced a reversal of the equalization process from the 1990s onward. As seen in Figure4.4, the growing difference between the average and median incomes (1) from the 1990s onward supports our earlier findings.8 Poverty rates (2) followed similar patterns: the “harsh” Finnish recession during the 1990s resulted in a decline in the poverty rate, which is due to the automatic redistribution mechanisms of the welfare state and the decrease in the average incomes.9 Furthermore, the poverty rates (2) increased in both countries, which indicates that part of the population “missed” the years of growth. The “harsh” recession after 2008 caused decreasing median incomes in Finland that partly lowered relative poverty rates; on the other hand, Sweden did not suffer such a drop in incomes or poverty rates. The increase in the gross earnings of the top decile as percentage median (3) as well as the top 1percent wealth share (4) followed similar growth trends as noted before, despite the periods of recession in the early 2000s and 2008–2009.10 Despite the rising contrast with the “haves and the have-nots” in Finland and Sweden, it is noticeable that the developments are significantly different from many other countries. For example, in the United States the average pretax real national income per adult increased roughly 60percent from 1980 to 2014; on the other hand, the real incomes of the bottom half of the population stagnated during this period.11 Thus, it is striking that half of the population did not reap the fruits of the economic growth at all during the last 30years. Discourses on income inequality Societal planning and the question of inequality One of the roles of human and social sciences today is to provide tools for societies and governments engaged in societal planning. Aplethora of academic research, surveys, and statistics are produced daily to serve this goal. Since World War II, and especially during the past decades, the university sector alone has grown enormously globally. In addition, human and social sciences have grown as fields, which can be seen in the pure number of research More or less equality? 69 100 150 200 250 300 Annual Income (2014, 1000 kr) 10 15 20 25 30 Annual Income (2017, 1000 eur) 1970 1980 1990 2000 2010 FIN, mean FIN, Md SWE, mean SWE, Md (1) Mean and median incomes 0 4 8 12 16 Share 1990 1995 2000 2005 2010 201 5 Finlan dS weden (2) Poverty rate 140 150 160 170 180 Share 1975 1980 1985 1990 1995 2000 2005 2010 2015 FinlandSweden (3) Earnings at top decile as % median 10 14 18 22 26 Share 1970 1980 1990 2000 201 0 Finlan dS weden (4) Top 1% wealth share Figure 4.4 Finland and Sweden in comparison. Note: (1) Equivalent annual income (household income divided by modified OECD consumption units). (2) Percent living in households with equivalent disposable income below 60percent median. (3) Personal gross earnings. (4) Share of top 1percent in total individual net wealth. Sources: The Chartbook of Economic Inequality (2019). Mean and median incomes from Finland (Official Statistics of Finland 2019). Mean and median incomes from Sweden (Statistics Sweden 2019). outputs in terms of publications. Moreover, a whole industry of consultants has emerged to serve both private and public actors,12 as well as research institutes and think-tanks of various kinds and with different political agendas to satisfy the need for information.13 Thus, there is a massive, and growing, amount of information available for decisions-makers to use– even to the extent that the reliability of “politicized” information has been questioned time and again by both politicians and researchers. In essence, the problems and mediums faced by the scholars and policy-makers in the 1970s were completely different from today, as we now are living in an age of information 76 Petri Roikonen et al. well as the slow democratization processes following the industrial revolutions and societal divisions they brought forth in the 19th century. Social spending increased rapidly between 1880 and World War II, and then boomed from the 1950s onward. The latter half of the 20th century witnessed the creation of various types of welfare state, ranging from the Anglo-American model of welfare restraint and individualism to the more universal Nordic welfare provision.56 The creation of the Finnish welfare state did not begin in earnest until the 1950s, and it was built on the stable institutions and governmental organizations that had evolved over centuries, strong economic growth, and structural changes arising from the post–World War II period. In addition, the ideas and solutions offered by Finland’s Nordic and other Western neighbors provided the building blocks of this emerging welfare state. The relatively rapid building of Finland’s welfare state proves that it is possible to create such institutions quickly if there are the resources and opportunities to do so, especially as a response to developing societal harmony and equality. Furthermore, it is possible to sustain such institutions if the welfare policies contribute to the economic growth (e.g., by creating human capital). Building and extending the welfare state in Finland during the 1970s and the 1980s occurred despite political parties were relatively far from each other in many facets of policy issues; thus, the thread against this development during the recession in the early 1990s might be one of the explanations why income inequality gained so much attention in the public press at the time (Figures4.5 and 4.6). The Finnish, or Swedish for that matter, development was faster than elsewhere in Europe, although hardly unique. And the end result was an encompassing welfare state with highly progressive taxation. This can be seen in the central government spending levels among most Western countries; in fact, they showed little growth until World War I, although there were noticeable differences between them. Subsequently, in the interwar period, especially in the 1930s, the average central government spending increased. After World War II, the effect of the emerging welfare state can be observed until the 1980s. The last phase seems to represent a leveling-off stage (or at least a period of slower growth) for modern welfare states. Thus, the two World Wars appear to have imposed tremendous growth pressures on central government roles in most Western countries. Finland, however, seems to have experienced a strong period of growth in the 1950s, which differs from most of the others, thus catching up to Nordic levels of welfare provision and tax policies, while also entering a period of extremely rapid structural change for its economy. The United States, the embodiment of the Anglo-American welfare model, consistently spent less than the Europeans in the 20th century, whereas Sweden spent much more than Finland in the 1960s and the 1970s.57 Therefore, the emergence of welfare states in the postwar period took place in increments. For example, between 1937 and 1960, the percentage of GDP of public expenditures increased at a relatively slow pace, often more related to the increases in defense spending caused by the Cold War. This share was circa 23percent in 1937 compared to roughly 28percent in 1960. However, the More or less equality? 77 period 1960−1980 could be described as the real golden age of public sector intervention, with a considerable macroeconomic consensus on the government’s role. Criticism of this era of Keynesian dominance emerged in the aftermath of the economic crises of the 1970s, increasing in the 1980s and the 1990s with the arrival of fiscally more conservative governments, especially in the UK and the United States. Public choice and other institutional theorists have since been among the many critics of the welfare states. How extensive was this government growth? If we look at the development of general government expenditures (as a percentage of GDP) in the latter half of the 20th century, we see that the average share increased steadily from approximately 43percent in 1980 to circa 46percent in 1996. As Peter Lindert has pointed out, most Western nations did not cut their spending uniformly nor permanently, and globalization has since increased the demand for a government response. Finland certainly belongs in this group as well, having made only small welfare spending cuts in the 1990s and since the economic crisis of 2008.58 Furthermore, Finland closely followed the examples of Nordic (mainly Swedish) policy models in the post–World War II period, especially since the left-wing parties had gained significant momentum after the war and other parties would seek to bolster their electoral chances by collaborating with them on certain issues. Other factors that made this possible included the rapid economic growth and the structural changes in the Finnish economy in the 1950s and the 1960s. During the years 1948−1960, public expenditures, which now subsidized government-run health care, social security, and administration, grew at an annual average of 4.4percent. The Finnish welfare state, however, really took off in the 1960s, when the growth of public expenditures accelerated. The Disability Pension Act and the Old Age Pension Act were passed in 1962, and the Health Insurance Act in 1964. These measures were followed by others, especially in education and health care in the 1970s, which increased the social spending role of the municipalities and local government. Education and health-care expenditures have generally grown fast, although the proportion of current transfers and subsidies increased even faster in the postwar period.59 The growth in most areas of spending has continued since the 1980s, although the growth has slowed down. The periods of recession, such as the early 1990s and the period since 2008, have put more fiscal pressure, both domestically and from abroad, on the Nordic welfare states. In addition, the recent refugee crisis has added to the burden of the welfare bureaucracies in these countries, and it has led to a political backlash among the Nordic populations, as seen in the rise of nationalist/populist parties, such as in Finland and Sweden, and more stringent immigration policies, like in Denmark.60 However, on the aggregate, while the postwar Nordic societies have built up extensive social safety nets and invested in human capital, they have also enjoyed a high level of economic growth and living standards, something that Lindert has termed the free lunch puzzle. Why? According to Lindert, the Nordic societies have smartly focused on taxing mostly harmful behavior (i.e. enacting socalled sin taxes, on the use of tobacco, alcohol, gasoline, etc.) to provide societal 78 Petri Roikonen et al. gains, which has helped them redistribute money for more productive endeavors. In fact, one of the fundamental aspects of the durability and effectiveness of Nordic welfare states pertains to their redistribution policies. Thus, the factor income inequalities (capital, salary, and entrepreneurial incomes) are considerably higher when compared with the disposable income inequalities, such as when adding the social incomes to the factor incomes as well as subtracting taxes that were paid and other payments (Figure4.7). The crucial fact is that factor income inequalities (1) increased significantly in both Finland and Sweden from the late 1970s to around year 1995; however, the disposable income inequalities remained at similar levels in Sweden until 1990 and in Finland until 1992. In other words, the redistribution activities of the welfare state held the inequalities at similar levels even as the factor or market inequalities increased. However, the impact of the redistribution policies clearly diminished during the latter part of the observed period: the disposable income inequalities increased even though the factor income inequalities remained stagnant or slightly increased. Evidently, this process can be characterized by the following ratio: the disposable income inequality divided by the factor income inequality (2). Thus, this ratio (2) tells us how much the market income inequalities were decreased by redistribution policies. In both countries, the redistribution 15 25 35 45 55 Gini coefficients 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 FIN, Factor inc. FIN, Disposable inc. SWE, Factor inc. SWE, Disposable inc. (1) Gini coefficients .3 .4 .5 .6 .7 .8 Disposable Gini / Factor Gini 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 FinlandSweden (2) Redistribution through taxes and transfers Figure 4.7 Gini coefficients and redistribution in Finland and Sweden (household, OECDequivalence scale). Note: (1) Gini coefficients are calculated from factor (entrepreneurial + salary + capital incomes, including capital gains) and disposable incomes (factor incomes + social transfers– paid taxes and transfers). (2) Disposable Ginis are divided by Factor Ginis. Source: Finland (OSF 2019: Income distribution statistics); Sweden (Statistics Sweden 2019: Household finances). More or less equality? 79 policies reversed around mid-1990s toward less equalizing policies. The next turning point occurred after 2008, when Finland and the rest of the world suffered a recession, unemployment increased, and the automatic welfare state social transfers increased in volume. In addition, the recession was not as severe in Sweden, and the development toward less equalizing policies was at least halted. Nevertheless, it is good to bear in mind that in terms of both of these figures, the level of unemployment and the “automatic” social transfer system were quite crucial, not necessary the policy changes. One of the key changes in the redistribution policies in Finland was the separation between labor and capital income taxation in 1993, which meant that labor income tax rates were progressive and the capital income tax rates were flat (25percent in 1993). In addition, the dividends from the rich closed companies were partly tax-exempt (Jäntti etal. 2010, Tuomala 2019). This strengthened the incentives to transform labor incomes to capital incomes since the top marginal tax rate on labor income was considerably higher. Thus, partly due to the changes made to the taxation, the share of the capital incomes in the top 1 percentage increased from 11percent to about 63percent between the years 1990 and 2004. Furthermore, whereas the average tax rates of the median incomes decreased only slightly from 22percent to 21percent between the years 1987 and 2004, on the other hand, the top 1percent tax rates dropped considerably from 44percent to 34percent (Jäntti etal. 2010). These redistribution policies were obviously not only aimed at keeping inequality in its various forms, especially income (or in some cases wealth) inequality but also aimed at societally acceptable levels– and what was considered acceptable or desirable obviously changed over time. In fact, the money arising from the redistribution policies also went toward investments in policies that would reduce inequality and provide economic mobility. These types of impacts can be seen in various indicators and outcomes in the Nordic cases. As seen in Table4.1, in the beginning of the 20th century Finland was clearly Table 4.1 Average years of schooling in Norway, Denmark, Finland, and Sweden, 1900–2010. Year Norway Denmark Finland Sweden 1900 5.8 5.6 1.7 5.5 1910 6.0 6.0 2.0 5.9 1920 6.3 6.3 2.7 6.2 1930 6.5 6.6 3.6 6.6 1940 7.0 6.9 5.0 6.9 1950 7.6 7.6 6.0 7.4 1960 8.8 8.9 7.0 8.5 1970 10.0 9.8 7.6 9.7 1980 11.3 10.8 9.5 11.0 1990 12.1 11.4 10.6 11.8 2000 12.4 12.0 11.5 11.5 2010 12.6 12.1 12.0 11.9 Source: Clioinfra database. Available from: https://clio-infra.eu/. (Cited 1 March2019). 80 Petri Roikonen et al. a laggard in terms of schooling outcomes. However, by mid-century, this had changed already, and Finland had started to catch up. By the end of the century, Finland was on part with the other Nordic countries. In general, improvements in social well-being have come from many sources in the last 100years among the leading Western economies, but one of the most important aspects has been the growth in human capital. Regardless, Finland was far behind until the 1960s and the comprehensive school reform, which put Finland eventually on par with the others, and even ahead in terms of achievements (PISA tests) in the 21st century. In general, in most European countries education inequality decreased until the 1960s, and even beyond in some cases. However, in Finland the largest drops came before the new education laws in the 1960s, and the level of inequality even increased initially. In most countries this measure of inequality has decreased in the recent decades.61 The Nordic countries were no exceptions to this general pattern. Another measure of human capital, numeracy, gives us a longer-term view of these trends in the Nordic countries. Norway caught up last among this group to the rest, but overall all these countries had high levels of numeracy by the early 20th century and that did not change by the later policies. The educational policies and expansion of the latter part of the 20th century simply reinforced the strength of the Nordic societies as highly educated polities,62 which could be seen especially in Finland’s superb performance in the PISA tests in the early 2000s.63 Finally, one important measure of societal inequality pertains to gender discrimination and status. It is much harder to obtain long-run data on such indicators. One way to look at this is through the representation of women in the Nordic parliaments (Figure4.8). The most robust growth occurred from 0 5 10 15 20 25 30 35 40 45 50 196019701980 1990 2000 2010 % of Women Year DenmarkFinlandNorway Sweden Figure 4.8 Number of female members in the parliament. Source: Clioinfra database. Available from: https://clio-infra.eu/. (Cited 1 March2019). More or less equality? 81 the 1970s onward. Overall, women MPs have quadrupled their share of parliamentary seats in the postwar era. As we noted earlier, gender imbalance on earnings became one of the focal points in the public discourse in the 1990s, and the voting patterns seem to be linked to this change as well. Overall, social, economic, and political mobility have become hallmarks of the Nordic societies, and the welfare and redistribution policies have certainly helped them along in this direction. Discussion and conclusions Inequality in its various forms has become a hot topic of broad societal discussion, in both the academic and policy circles, around the globe, most recently due to Thomas Piketty’s work (e.g. 2001, 2014). However, we often perceive both public and policy discussions to be somewhat divorced from scholarly discourses, especially in determining what actual policy approaches would be desirable to achieve certain societal outcomes. Here we have displayed the broad trends in income inequality, and the Nordic countries are clearly still in the lower inequality group in the 21st century. Moreover, the Nordic trends have followed international patterns fairly well, namely high inequality in the late 19th century, lesser inequality after World War II, and rising trend since the late 1980s. Clearly the Nordic societies have converged over time economically, socially, politically, and culturally. We also discussed the redistribution and welfare state policies that have kept inequality lower in the Nordic societies, particularly in Finland and Sweden. Our broad analysis of the topic of income inequality in the public sphere showed that the patterns were not entirely similar in Finland and Sweden, however. In Finland, it seems, certain academic debates also became public debates, and thus most likely had a greater impact on policy debates as well. In Sweden, in contrast, income inequality was discussed less until the recent years. Broader debates about welfare states and the role of the government in the aggregate economy were also parts of these discussions. In general, regardless of the occasional critiques of the welfare and redistribution policies, the broader Nordic societal agreement about the need for welfare state has been quite solid in poll after poll, even among the more conservative political parties. Our framework outlined a connection between research, policies, and discourses. We would argue here that in the last 50years or so those connections have existed in Finland, although not always. In Sweden, the connections, at least in the context of income inequality, were less pronounced, perhaps also due to the earlier adoption of welfare and tax policies. Thus, the Nordic countries were not quite as homogenous as they sometimes appear. Our goal here was to examine certain historical trends in income inequality and debates surrounding this topic, especially from the lens of redistribution and welfare state policies. It seems quite clear that politicians and the general public are aware of certain debates in for example in economics and economic history concerning income inequality; nonetheless, their understanding of the 82 Petri Roikonen et al. facts or data is often limited. Typically, many politicians would assume that income inequality is rising fast in countries like Finland, whereas it is actually remained relatively similar levels or only slightly increased in the 2000s after rapid increase in the 1990s.64 Furthermore, Finland and other Nordic societies are much more equal when considering incomes, or other types of inequalities, than most places on this globe. The redistribution policies have been fairly effective in the post–World War II era, and the welfare state policies have created more equal opportunities for also minorities, yet the impact of those policies have waned somewhat in the 21st century. Should scholars be more active in the public sphere, to provide deeper historical context for debates and point toward policy solutions? It is quite difficult to do that, especially in a way that various forms of media would find interesting enough. Moreover, it is also difficult in current climate of viral stories, fake news, and extensive social media networks. Regardless, while all those elements of modern media can distort “truths” and mislead debates, they can also amplify messages from scholars like Piketty, who can have a real impact on how societies evolve. And most universities and research centers today in fact value the idea of their employees having a public impact, even to the point of providing rewards for that, although they would equally be risk averse toward potentially negative publicity and embarrassment. This is the difficult balance that 21st-century scholars will face in their careers, and the topic of income inequality (or any other type of inequality) is a key topic of societal debate now and in the future. Sources The Chartbook of Economic Inequality: www.chartbookofeconomicine quality.com/about. (Retrieved 31 March2019). The Clioinfra database. Available from: https://clio-infra.eu/. (Retrieved 1 March2019). Dagens Nyheter (DH), The Royal Swedish Library, The Dagens Nyheter Digital Archive (Retrieved 10 January2019). Helsingin Sanomat (HS), The Päivälehti Archives, Helsinki (Retrieved 14 January2019). The Intergovernmental Panel on Climate Change (IPCC), pecial report. www.ipcc.ch/report/sr15/ (Retrieved 16 November2018). The Luxembourg Income Study (LIS), www.lisdatacenter.org/data-access/ [Accessed 2 August2019]. Milanovic, Branko L. (2016). All the Ginis Dataset, World Bank Group. https://datacatalog.worldbank.org/dataset/all-ginis-dataset. (Retrieved 15 November2018). Official Statistics of Finland (OSF) (2019): Income distribution statistics [e-publication]. ISSN=1799–1331. Helsinki: Statistics Finland [Referred 1/4/2019]. Access method: www.stat.fi/til/tjt/index_en.html. More or less equality? 83 Official Statistics of Finland (OSF): Population projection [e-publication]. ISSN=1798–5153.2018. Helsinki: Statistics Finland [Referred 16/11/2018]. Access method: www.stat.fi/til/vaenn/2018/vaenn_2018_2018-11-16_tie_ 001_en.html. Official Statistics of Finland (OSF): Gini coefficients and other income inequality measures in 1966–2017. Income distribution statistics, 015 (http://pxnet2.stat.fi/PXWeb/pxweb/en/StatFin/StatFin__tul__tjt/ statfin_tjt_pxt_015.px// (Retrieved 2 August2019). Statistics Sweden (2019). Statistical database: Household finances. www. statistikdatabasen.scb.se/pxweb/en/ssd/START__HE__HE0103__HE0 103A/DispInk8/?rxid=0309dbd3-a62c-45e7-a0c3-50650e04aca3#. (Retrieved: 31 March2019). The World Inequality Database (WID) (2018). Downloaded from wid. world on 29 May2018 at 07:19:30. DOI: http://wid.world/data/. Notes 1 See e.g. Lindert& Williamson 2016, Milanovic 2016, Piketty 2015a, 2015b, Piketty, Saez& Zucman 2018. 2 Prados 2018. 3 For summaries of the top income literature, see Atkinson& Piketty (eds.) 2007, Atkinson& Piketty (eds.) 2010. And earlier studies by Lindert 2000, Morrison 2000. 4 Roine& Waldenström 2015. 5 Törmälehto 2019, Riihelä& Tuomala 2019. 6 See e.g. Burkhauser etal. 2012. 7 Leigh 2007, Alvaredo 2011, Burkhauser etal. 2012. 8 See the growth rates between deciles in e.g. Jäntti etal. 2010. 9 For example, Riihelä& Suoniemi 2017. 10 Nevertheless, some studies show that wealth inequality and capital income inequality have grown more rapidly in Finland, e.g. Riihelä, Sullström& Tuomala 2017. 11 Piketty, Saez& Zucman 2018, 553. 12 Kipping 1999. 13 E.g. Kotilainen 2018. 14 Mihailidis& Viotty 2017. 15 Especially the 2018 Intergovernmental Panel on Climate Change (IPCC) was widely discussed. Similarly, the population projection by Statics Finland in November 2018 raised concerns. See: www.stat.fi/til/vaenn/2018/vaenn_2018_2018-11-16_ tie_001_en.html (cited 16 November2018) and www.ipcc.ch/report/sr15/ (cited 16 November2018). 16 Andersson 2012, Ihalainen& Kinnunen 2018. 17 Andersson 2006, Roslin 2010, Kotilainen 2018. 18 Roslin 2010. 19 This article is not intended to give a definitive literature review on the research dealing with income inequality in Finland or Sweden during the 1970s–1990s; rather, we will provide some examples of the key literature published especially in Finland. – See also Baten& van Zanden 2008. 20 Broadberry etal. 2015. 21 E.g. Kuznets 1959, 1963. 22 See especially Milanovic 2016, 5, 55. 23 E.g. Renvall 1900. 84 Petri Roikonen et al. 24 Gini 1921, Ceriani& Verme 2012. 25 E.g. Bentzel 1952, Brummert 1963, 1965, Fougstedt 1948, Hagström 1944, Hemmilä 1960, Jylhä 1945, Wahlbeck 1955. 26 E.g. Bjerke 1957, Bentzel 1957, Aukrust 1957, 1970. 27 Kulutustutkimus (http://pxnet2.stat.fi/PXWeb/pxweb/fi/StatFin/StatFin__tul__tjt/ statfin_tjt_pxt_015.px/?rxid=b5e03ef3-7a8c-440a-8eb5-ef756bd4cd76). See also see also Linnaila 1969, Hjerppe 1972, Janhunen 1969, Salavuo 1970. 28 E.g. Hjerppe& Lefgren 1974. 29 See also Suominen 1979. 30 See especially: www.lisdatacenter.org/data-access/. 31 E.g. Sawyer& Wasserman 1976. 32 Partanen 1970. 33 E.g. Dasgupta, Sen& Starret 1973. 34 Noponen 1973, Suominen 1974, 1979, Pöntinen& Uusitalo 1975. 35 See section3 for further details about literature. 36 HS 7 July1969. 37 E.g. HS 29 December1971. 38 E.g. HS 5 January1986. 39 E.g. Lahdenperä 1987. 40 Tolvanen 1985a, 1985b, Puurunen 1987, Leppänen& Tolvanen 1987, Ylisippola 1989, Ringen& Uusitalo 1990. 41 E.g. Wahlbeck 1955, Kiiskinen 1958, Somervuori 1972. 42 E.g. Sailas 1987, Uusitalo 1988, Takala etal. 1988, Paananen 1988. 43 E.g. Sullström 1987, Pekkarinen 1988. 44 Especially Nummela 1987, 1988a, 1988b. 45 Laukkanen 1989, Tossavainen 1991, Asplund 1992. 46 Hagfors& Vartia 1989. 47 Sukupolvityöryhmä 1994. 48 Acker 1990. 49 E.g. Isotalus etal. 1989, Brunila 1990, Asplund 1995a, 1995b. 50 See e.g. Roine& Waldenström 2010, Jäntti etal. 2010. 51 A source critical note: The digital collections of Helsingin Sanomat count the frequency of the keyword per page until the turn of the 1990s, and per article from thereafter. Thus, the figures are not entirely comparable. Moreover, the articles dealing with income inequality both in Finland and in Sweden did not solely discuss the topic as a domestic issue. Nevertheless, articles discussing inequality as an international challenge were, on the whole, a minority. 52 HS 5 March1973. 53 HS 29 March1979. 54 E.g. HS 15 February1985. 55 See Östberg in this volume. 56 Lindert 2004. On different types of welfare states and especially the Scandinavian “model”, see e.g. Esping-Andersen& Korpi 1984. 57 Eloranta& Kauppila 2006, Hannikainen& Eloranta 2019. 58 Tanzi& Schuknecht 2000, 15, 197. On recent trends, see esp. Greve 2018, Kangas& Kvist 2018. 59 Alestalo& Uusitalo 1986, Hjerppe 1989, 130−131. 60 Heikkinen 2019. On rise of right-wing populism and immigration policies, especially in Denmark, see Heinze 2018. See several other contributions in this volume for further discussion of these discourses. 61 Van Zanden etal. 2014. 62 See e.g. Modalsli 2017 for discussion of Norway in the long run. 63 Cf. Sahlberg 2016. 64 See also Gustafsson& Uusitalo 1990, Haavisto 2018. More or less equality? 85 References Acker, Joan, 1990: Samanarvoinen työ. Tutkimus työelämän sukupuolistuneista rakenteista. Tampere: Vastapaino. Alestalo, Matti& Uusitalo, Hannu, 1986: “Finland” in Peter Flora (ed.) Growth to Limits: The Western European Welfare States Since World War II. 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