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Economic Poverty in Finland 1971-2004


  • Sullström, Risto
  • Riihelä, Marja
  • Tuomala, Matti


In this paper we examined trends in the economic poverty in Finland using two data sources, the IDS (Income Distribution Survey) and the CES (Consumption Expenditure Survey). We drew on the recent literature on poverty analysis to analyse a range of poverty measures, using dominance conditions to rank the distributions of living standards. We found that poverty rate was the U-shaped curve over the period 1971 - 2004. As regards trends in poverty over time, the long-run perspective available from the CES indicated that from the early 1970s to the beginning of 1990s, the relative poverty rate declined. The latter part of the 1990s and the early years of 2000s were clearly different. We found that relative poverty rose over the period 1995 - 2004 for a very broad class of poverty measures and a wide range of poverty lines. Poverty rate, measuring poverty line 60 per cent from median income, was about 7 per cent (328000 persons) in 1990 and 11 per cent (557000 persons) in 2004. At the same time poverty became more severe. We also found that since the mid 1990s the poverty rate among children grew much faster than the poverty rate in the whole population. Whilst the total numbers in poverty during the 1987 - 2004 on these various definitions rose markedly, the composition of the poor also changed significantly. There is little doubt that unemployed households are the most vulnerable group of the population. Another vulnerable group is families with youngest children less than 7 years.

Suggested Citation

  • Sullström, Risto & Riihelä, Marja & Tuomala, Matti, 2007. "Economic Poverty in Finland 1971-2004," Discussion Papers 418, VATT Institute for Economic Research.
  • Handle: RePEc:fer:dpaper:418

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    References listed on IDEAS

    1. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-764, July.
    2. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    3. Marja Riihelä & Risto Sullström & Matti Tuomala, 2001. "What Lies Behind the Unprecedented Increase in Income Inequality in Finland During the 1990's," Working Papers 0102, University of Tampere, School of Management, Economics.
    4. Sen, Amartya, 1979. " Issues in the Measurement of Poverty," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 285-307.
    5. Jantti, Markus & Danziger, Sheldon, 2000. "Income poverty in advanced countries," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 6, pages 309-378 Elsevier.
    6. Ilpo Suoniemi, 1993. "Public Welfare Services and Inequality: Introduction to methodology and some examples with the 1985 Finnish Household Expenditure Survey data," Discussion Papers 45, Government Institute for Economic Research Finland (VATT).
    7. Atkinson, A.B., 2000. "A European social agenda: poverty benchmarking and social transfers," EUROMOD Working Papers EM3/00, EUROMOD at the Institute for Social and Economic Research.
    8. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-169, July.
    9. Sullström, Risto & Suoniemi Ilpo, 1995. "The Structure of Household Consumption in Finland, 1966-1990," Research Reports 27, VATT Institute for Economic Research.
    10. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-177, January.
    11. Marja Riihelä & Risto Sullström & Matti Tuomala, 2001. "On Economic Poverty in Finland in the 1990s," Working Papers 0109, University of Tampere, School of Management, Economics.
    12. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    13. Kanbur, Ravi & Keen, Michael & Tuomala, Matti, 1994. "Labor Supply and Targeting in Poverty Alleviation Programs," World Bank Economic Review, World Bank Group, vol. 8(2), pages 191-211, May.
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    Cited by:

    1. Kanbur, Ravi & Tuomala, Matti, 2016. "Groupings and the gains from tagging," Research in Economics, Elsevier, vol. 70(1), pages 53-63.
    2. Sullström, Risto & Riihelä, Marja & Suoniemi Ilpo, 2008. "Tax Progressivity and Recent Evolution of the Finnish Income Inequality," Discussion Papers 460, VATT Institute for Economic Research.
    3. S. Subramanian, 2009. "Revisiting the Normalization Axiom in Poverty Measurement," Finnish Economic Papers, Finnish Economic Association, vol. 22(2), pages 89-98, Autumn.

    More about this item


    Poverty; poverty measures; ordinal poverty comparison; Income distribution; Tulonjako; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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