Kela Lecture comment on Gösta Esping Andersen Asymmetric Opportunity Structures and Family Policy

Ulla Hämäläinen

Senior researcher

Kela 6.6.2014

Intergenerational mobility, family background and welfare state

• We already know some stylized facts

• Family affects the outcomes of their children

• The correlation between parents and their offspring is lower

in Nordic countries than it is e.g. in USA and UK

• Sibling correlations lower in Nordic countnries also

• We are learning more from the sibling correlations all the

time: about half of the sibling correlation on adult income is

explained by family background

− Sibling correlations also widen the perspective from merely

thinking that it is the parental income that counts

• But next questions of mechanisms: how they

operate is still at early states, but we are learning all

the time

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Policy changes income mobility?

• Country comparisons: Nordic welfare states vs. UK,

USA, Italy, …

• Evidence also within countries (especially Nordic

countries with good quality data) of changes over

time: the income elasticities have changed by .10

units in some countries in no more than 10-15 years

• Björklund et.al. (2007): Sweden brother correlations: 1930s

the correlation .34; from 1950s .23

• Pekkala & Lucas (2007) for Finland: 1930s parental

correlations: for sons 1930s .30 = > 1950s .20; daughters

.25 to .15

• Bratsberg et.al. (2007): decline also in Norway 1950s to

1960s (For a review see Björklund & Jäntti (2009) The Oxford Handbook of Economic Inequality)

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…policy changes…

• Direct evidence from large educational policy

reforms to identify direct causal evidence:

comprehensive school reforms & other

• Causal inference due to gradual implementation

• Sweden 1950s: Meghir & Palme (2005) reform had a

positive income on earnings for children from low income

families, but the not on average = > income mobility

increase. Holmlund (2007) directly on mobility: increased

• Finland: Pekkarinen et.al. (2007) income elasicity .30 => .23

• Mayer & Lopoo (2008) exploit variation in US government

expenditure: states with higher expenditure => lower

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• Very difficult to identify causal mechanisms of

welfare state policies to children’s (long-term)

outcomes when the policies have been there for a

long time and policies are universal

• Large reforms are rare

• Difficult to show the effectiveness of small reforms

• A huge amount of work going on on how different (generally

small) social reforms affect families and children

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• Polarized parenting i.e. ratio of care time

• More educated parents invest more time on their

children

• Eva Österbacka (2010 IZA dp) on time use data

• Hämäläinen and Takala (2007) on fathers’ parental leave

usage: why fathers with high education / high income are

(low compensation rate) are the ones taking parental leave

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Quality child care as an early investment

• Why (even) economists are interested investments

in children?

• Governments who care about equity can

compensate the diffs either in final outcomes or try

to equalize initial endowments

• Research suggests that equalizing the early

endowments with early interventions is more cost-

effective than trying to affect final outcomes

• James Heckman. Rate of return to early investments on

disadvantaged children around 10%

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• Fixing the problems in adolescence (or later) has

proven difficult, non-effective and costly

• E.g. interventions for unemployed or NEET youth and adults

• For a review on the effectiveness of active labour market policies

see e.g. Card, et.al. in Economic Journal (2010, 120:548)

• Mounting evidence that quality child care help

disadvantaged children

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Case: Finland

• According to Haataja – Juutilainen (2014) Finnish

moms having their first kid around millenium have

been on average 3,5 years home with their children

• The longest care periods are among those with low

education and low attachment to the labour market

• Subjective right for publicly provided child care with

income related cost of care + home care allowance

• The Finnish exceptionality in Nordic context is that

children aged 3-6 are not participating in formal

child care

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Formal childcare participation, under 3 years

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Source: Nososco

Childcare and primary education participation, 0-5-years

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0

10

20

30

40

50

60

70

80

90

Finland Norway Sweden Denmark

%

• Question: if the evidence is pointing to the direction

that ”learning begets learning” or ”skills begets

skills” AND especially the disadvantaged children

would gain most from the early interventions via

quality care

does this mean that we Finns have chosen the

wrong policy instruments in our care policy?

Even more bold question would be…

The answer: we need good quality research

• Only good quality will do, since…

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Most disadvantaged children?

• Stylized fact: First generation immigrant children are

doing worse than natives everywhere in educational

measures (e.g. Pisa)

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Immigrant deficit in educational outcomes

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Raw difference

Natives at 23

One parent

Finn OECD

Russia, Estonia, Former

SU

Other immigr.

Secondary educ

degree by 23 .85 -.07 -.18 -.11 -.37

Enrolled in university

or polytech by 23 .45 .00 -.05 -.09 -.26

Source: Ansala, Hämäläinen, Sarvimäki (2014)

Difference to natives after controls

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After controls

One parent

Finn OECD

Russia, Estonia, Former

SU

Other immigr.

Secondary education

degree by 23 -0,03**

(0,01)

-0,07

(0,05)

0,03*

(0,01)

-0,18**

(0,03)

Enrolled in university or

polytech by 23 0,03**

(0,01)

0,09**

(0,03)

0,08**

(0,02)

-0,05**

(0,01)

OLS regression, area clustered standard errors in parenthesis; Sign. <0.01 **, <0.05 *

Controls for birth year, area, # of siblings; socio econ background at age 15

Children’s income deciles according to the language spoken

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• One can argue that early interventions would be of

great importance for immigrant children living in

deprived backgrounds

• Multiple disadvantages: income, language, familiarity with

the educational systems and labour markets

• Question: Is the quality child care and early

intervention system working for these children?

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