Poverty and Low Income in the Nordic Countries

This text results from an initiative by the Nordic Council and Nordic Council of Ministers to better understand the structure and development of poverty and low-income in the five Nordic countries: Denmark; Finland; Iceland; Norway; and Sweden. The main question posed is how has the number of people living with low income changed and what characterizes such households? Since no official poverty line has been defined in Nordic countries, the study examines different definitions of poverty and discusses the change in poverty rates and poverty composition in the light of those different definitions. It concludes that: transfer payments from the public sector are largely responsible for the fact that, from an international point of view, relatively few people suffer from poverty in Nordic countries, ie. the welfare state works. Poverty among the elderly has fallen drastically since the mid 1970s as pension systems introduced earlier had taken effect. Poverty is increasing among the young population, ie. the welfare state has not developed a system to provide for young people who do not have the skills to enter the labour market.
For many, poverty is short term, but having been poor early on increases the risk of returning to poverty. So far the Nordic countries have been relatively homogeneous, but inequality is on the increase.