Generational differences in income trajectories in the Nordic welfare state

How much it matters for your income development what generation you happen to be born? We answer this question by using registers of the total population, we study generational income inequality during 1970–2018 and, for men and women in Finland. We follow the income trajectories of the cohorts born in 1920–1983 over their adult life course and observed, how certain structural factors explain differences in income trajectories. Our study expands state-of-the-art knowledge, as previous research has often bypassed the question of how much generational income differences explains of populations total income inequalities and what factors may explain the different generational income trajectories. Results show that overall generational income differences explained quarter for women and 6 percent for men total income inequality. Each successive cohort until 1980s had a higher average income trajectory. However, generation born in the 1980s has been falling behind. For both men and women, age structure and education were the most important factors associated with income inequality. On contrary to previous findings on Nordic welfare state, our results also indicate that, generational income trajectories are affected by economic shocks.