Egalitarianism under pressure? New perspectives on inequality and social cohesion

This project has evaluated societal forces that challenge the Norwegian egalitarian welfare state model. It identifies three important arenas for change: i) the Labor market, ii) the distribution of health conditions, and iii) the composition of families. Below, we present a brief summary of some key research findings from the project. More information about each item can be found at the project?s homepage: https://www.frisch.uio.no/english/projects/?view=project&pid=1178 ? The inequality in labor earnings among Norwegian men is rising. Around 1980, the average earnings differential between two randomly selected 40-year old men was approximately 50 percent of average male earnings. In 2010, the differential had increased to 70 percent of average male earnings. ? In a study of the relationship between own adult living conditions and family background ? where family background is characterized by the parents? position in their generation?s earnings distribution ? we find that the intergenerational mobility for persons born in the 1950s and 1960s has decreased slightly for men and a lot for women. ? Men and women born into the lowest parts of the parental earnings rank distribution have fallen considerably behind in terms of several quality-of-life outcomes, such as earnings rank, earnings share, consumption opportunities, employment, health, family formation, and life expectancy. ? An important explanation behind declining mobility at the bottom of the parental earnings rank distribution appears to be that educational resources have become more unequally distributed and that the economic returns to education has increased. We argue that higher educational requirements in the labor market has increased the importance of parental encouragement and support and thus augmented the handicap of being born into a less resourceful family. ? Another important factor behind declining mobility is related to immigration. Immigration from low-income countries contributes to reducing social mobility, whereas immigration from high-income countries increases it. The reason for this is that immigrants from low-income countries tend to compete in the labor market with natives from low-income families, whereas immigrants from high-income countries compete with natives from high-income families. As there has been much more immigration from low-income than from high-income countries, the net effect of these two forces have been to reduce social mobility. ? The social sorting into marriages has become less assortative over time. Spouses have gradually become more different in terms of family background. This implies that a smaller fraction of children has both parents recruited from low-income families. This development has contributed to an improvement of average school results among offspring. ? There is hypergamy in the matching of men and women into marriage/parenthood; i.e., within couples there is a tendency for the man to have a higher position in the male-specific distribution of earnings potentials the woman has in the female-specific distribution. This may give an incentive for the couple to prioritize his labor market career over hers, and thereby to explain the gender gap in earnings. ? Norwegian neighborhoods have become more segregated with respect to the inhabitants? earnings levels ? For children?s school results, it is best to grow up in a middle class neighborhood. Growing up in very poor or very rich neighborhoods has equally large negative effect on school results. ? There are (weak) indications that health problems (proxied by low birth weight) has become a larger handicap in the labor market. ? For temporary disability insurance (TDI) claimants, the level of the benefit has a significant impact on the duration of TDI spells. A 10 percent increase in the benefit level causes approximately a 3 percent increase in duration. ? The Norwegian Qualification Program (QP), targeted at hard-to-employ individuals with no (or negligible) social insurance entitlements, has helped its participants out of poverty and into employment. We estimate that four years after program entry, the employment probability has increased by 15-20 percentage points as a result of program participation. ? Stricter conditionality (in the form of, e.g., activation requirements) for granting social assistance to young people significantly reduces welfare claims and increases high school completion rates. It also reduces youth crime. ? The tendency toward lower average IQ levels in the Norwegian population has been caused by environmental factors and not by genetic factors. ? One such environmental cause in the phasing-on of commercial TV channels during the 1980s.

Prosjektet har bidratt med ny kunnskap om politikkrelevante forhold knyttet til tiltake for å sikre inkludering i arbeidslivet.

The project seeks to evaluate societal forces that challenge the Norwegian egalitarian welfare state model. It identifies three arenas for change: Labor market: Technological developments, intensified competition, and free movements of labor within Europe may affect forces of labor supply and demand in ways that impede labor market success among individuals with reduced work capacity. Health distribution: We see signs of polarization among the young and a scope for rising inequality in life-time earnings caused by differential employment opportunities among the old. The family: Changing marital sorting patterns are likely to affect intra-generational inequality across households, as well as the inter-generational transmission of human capital and wealth. These arenas for change will be addressed in three work-packages. The project is primarily empirical, drawing on merged longitudinal data from administrative registers describing the life histories of individuals and firms over a 15-20 year period. The project has a clear focus on identifying causal mechanisms that are of interest from a policy perspective. For example: - Has the open European labor market changed firms' incentives for hiring and keeping marginal workers, and to what extent are their practices affected by labor market regulations and social insurance design? - How can we expect added healthy life-years to be distributed, and will differences in opportunity and ability to work beyond the standard retirement age become a major source of inequality in life-time earnings? - Is the pattern of marital sorting changing in ways that cause increased inequality and/or less social mobility? The big research challenge is to sort out causality from selection. The project therefore focuses on identifying truly exogenous variation in key explanatory variables, and on research strategies designed to quantify key causal mechanisms of interest.