Between 2005-2020 this was to change, where Sweden and Norway saw a substantial rise in the number of poor children, while Denmark and Finland managed to maintain their favourable position in respect to child poverty. Why have Denmark and Finland succeeded much better than Norway and Sweden in keeping the proportion of economically disadvantaged children low during this period?
In the report we point at differences in both socio-economic and demographic patterns that may explain the difference in poverty outcome in the four countries.
We note, for instance, that inequality in household income among children increased substantially in Norway and Sweden between 2005-2020. In particularly, the poorest fifth of all children had a much slower growth in household income compared to the median household income, thus increasing the ratio between P50/P10. In contrast, this ratio remained more or less stable in Denmark and Finland in the same period.
One main driver of inequality and risk of poverty is the amount of earnings received by families with children. In Denmark and in Finland children in the lowest income quintile experienced a stronger work attachment among their parents between 2005 and 2020, where earnings made up an increasingly larger share of household income. Stronger work attachment is generally associated with a reduction in the risk of child poverty. The opposite, however, seems to be the case in Norway and Sweden. In these two countries the proportion of working adults dropped between 2005-2020 among the poorest fifth of children, and the importance of earnings as part of the “income packages” was reduced.
Changes in demographics probably also explains why child poverty rates differs between the Nordic countries. Both Sweden and Norway experienced a much stronger increase in the immigrant population between 2005 and 2020, compared to Finland and Denmark. It is well documented that children with an immigrant background are more at risk of poverty, compared to non-immigrant children. Between 2005 and 2020 there was a strong increase in the proportion of children with an immigrant background among the poorest fifth in Sweden and Norway. In Sweden their share rose from about 30 percent in 2005 to 74 percent in 2020. The corresponding numbers for Norway was from roughly 30 percent in 2005 to 51 percent in 2020. Denmark and Finland, on the other hand, saw a much smaller rise in number of immigrant children in the bottom fifth of household income, and they also make up a smaller share of the least well-off one-fifth of children.
A strong increase in the number of children with an immigrant background in Norway and Sweden, furthermore, probably explains why we see a drop in the education level of parents of children in the bottom fifth. This trend is not observed in Finland and Denmark during the same period.
In this report we use mainly data from EU-SILC, an annual household survey conducted in most European countries. However, being a sample survey, this limits the possibilities of performing more detailed analysis of children in low-income households. Should there be a follow-up study, the preferred datasets would be the census-like household income statistics that today exist in all the four Nordic countries.