Research on Finnish Society

Societal change and poverty in Finland 1971–2011: The roles of distribution of market income, redistribution
and demographic change

Ilari Ilmakunnas
University of Turku

This study analyses how changes in the distribution of market income, redistribution, and socioeconomic and demographic composition affected relative poverty in Finland in 1971–2011. The effects of these components are analysed using a shift-share analysis of households with a working-age head. Decompositions are carried out using subgroups based on educational level, socioeconomic status, the number of working adults in the household, age, and household size. The data used in the analysis are the Consumer Expenditure Survey for the year 1971 and the Income Distribution Survey for the years 1990 and 2011, from Statistics Finland. In the 1971–1990 period, the poverty rate declined mainly because the income transfer system was more redistributive in 1990 than in 1971. Between 1990 and 2011, the weakened redistributive capacity of the welfare state increased the poverty rate. Changes in the distribution of market income and increase in the number of persons without incomes related to the market also contributed to increasing poverty during the recent decades.

Keywords: Poverty, societal change, redistribution, shift-share analysis

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