The Nordic Model - Embracing globalization and sharing risks

Social mobility is higher
in the Nordic countries
than in France,
the UK or the US
The Nordics rank high
on indicators of social
welfare but are not
the biggest spenders
There exists a Nordic
model and it has performed
relatively well
also benefits in kind were included. Inequality is low in the Nordic
countries as well as in the Netherlands and Austria, while it is high
in the Anglo-Saxon and South-European countries.
Social mobility refers in this context to a measure of intergenerational
income elasticity, i.e. a measure of the strength of the
relation between income levels of children and parents. There are
several possible reasons why children tend to “inherit” their parents’
socio-economic status (genes, wealth, transmission of learning
behaviour and attitudes from parents to children). Redistributive
family policies and particularly the educational system are probably
some of the main forces working in the opposite direction and
contributing to intergenerational income mobility.
As is seen from figure 3.6, the intergenerational income
elasticity is lower, that is, social mobility is higher in the Nordic
countries than in France or the UK (or in the US). This may be
deemed noteworthy, as few people find it desirable that the socioeconomic
status is strongly hereditary whatever the views held on
current income inequality.
A second observation is that the Nordic countries score well
in terms of indicators of social welfare. In figure 3.7 we show a
measure of social expenditure and the OECD’s “composite social
index”, which is a broad-based measure of social well-being that
aggregates a number of sub-indices covering “self-sufficiency”,
equity, health and social cohesion. 9 The composite indicator gives
the highest ranks to Sweden, Denmark and Finland, while low
ranks are accorded to the countries in the South. This measure
is strongly correlated with GDP per capita, though the Nordic
countries get higher ranks for their social performance as compared
to their GDP per capita (contrary to, for instance, the US). As is
seen, the Nordics achieve comparatively good results without in
all cases being among the high spenders. 10
The observations in this and the preceding chapter substantiate
the claim that there exists a Nordic model in the sense of a
number of shared attributes that are economically, socially and
politically significant. What is the “bottom line” with regard to
the performance of this model? Employment and productivity
rates in the Nordic countries are relatively high, the former more
so than the latter. The growth rate of GDP per capita has been
The performance of the Nordic model · 55