Research
Research
The presence and implications of asymmetric information within the Finnish pension system is largerly an open question. Based on the observed and estimated mortalities, I find that the variation across life expectancies in different retirement ages is negligible, yielding to an average increase of 233 euros or 0.07% in lifetime pensions for people who retired between 2005 and 2016. Furthermore, the supplementary pension contributions associated with postponing retirement are lower than the expected increase in lifetime pension benefits. If ensuring actuarial fairness is a priority for the system, stronger incentives should be implemented to encourage later retirement.
A common criticism of redistribution is that it focuses on inequality of outcomes, and the sources of income differences are neglected. Indeed, income differences may also reflect differences in effort, and theories of Equality of Opportunity postulate that such differences should not be equalized by society. This paper examines how redistribution, via tax-benefit policies, influences equality of opportunity in European countries. The results indicate that redistribution of outcomes also improves opportunities, by reducing inequitable income differences. But, seen from the Equality of Opportunity viewpoint, redistribution may go too far in many European countries. This is corroborated by the finding that the extent of redistribution required to neutralize the effect of circumstances on incomes is smaller than the actual redistribution in most, but not all, countries.
One possible factor affecting inequality in adulthood is the place of living during childhood. I find significant exposure effects of childhood neighborhoods on intergenerational income mobility and on the probability of matriculating from high school. However, these effects disappear when controlling for family fixed effects, suggesting differential selection of families on age at move of the child. I conclude that the differences between regions are likely to stem from sorting rather than from causal effects of neighborhoods. My results demonstrate that the studies conducted in the United States are not necessarily generalizable to the contexts of different societies such as the Nordic welfare state.
This study examines not only annual income poverty but also persistent poverty, which considers both the risk of being poor and inequality among the poor. Using 20 years of panel data (1995–2014) covering the population of mainland Finland, we find that increases in poverty risk largely reflect persistent poverty. While overall poverty has grown, the poor population has split into two groups: those experiencing short-term poverty and those in chronic, long-term poverty. Over time, people spend longer periods continuously below the poverty line, and income differences among the poor have slightly increased.