Intergenerational determinants of income level in Finland

Outi Sirniö, University of Helsinki
Pekka Martikainen, University of Helsinki
Timo M. Kauppinen, University of Turku

This study estimates the level of intergenerational transmission of income in contemporary Finland and assesses the contribution of other social characteristics to this relationship. Previous studies show that resources of the family of origin have apparent association with their children’s outcomes in adulthood. Research on income mobility that also incorporates information on other socioeconomic and demographic factors is seldom carried out. A longitudinal register-based data-set obtained from Statistics Finland used in this study is a representative 11% sample of the whole population residing in Finland. Cohorts born 1973 to 1976 are selected for this analysis. Parental characteristics are assessed between 1987 and 1991 when the participants were aged 13 to 16, and corresponding individual characteristics between 2003 and 2007 at the age of 29 to 32. Mobility tables and logistic regression modeling are used to analyze intergenerational associations focusing on entry into the lowest and the highest income quintile in adulthood. About every third of those originating from the lowest and the highest income family backgrounds also end up in the corresponding income level. Association between personal and parental income level is particularly explained by parental social class and education level, especially for men. Personal social class and education level mediate the effects of parental income level more notably among women than men. Single-parenting and periods of unemployment increase low income risk. Income mobility from bottom to higher income is more challenging than to the reversed direction. Results show that both parental and personal socioeconomic characteristics determine one’s income level in adulthood. Eventhough Finland is considered to be a society with, compared to other Western countries, a high level of social and income mobility, results indicate that those with more privileged backgrounds benefit greatly. Meanwhile, more effort is clearly required for the others to achieve higher position in the society.