Finnish data now included in the international GRID database
Earnings inequality and earnings dynamics in Finland can now be compared with those in 25 other countries. Researchers from VATT Institute for Economic Research and the Finnish Centre of Excellence in Tax Systems Research (FIT) produced the Finnish statistics for the international Global Repository of Income Dynamics (GRID) database.
The Global Repository of Income Dynamics (GRID) is an open-access international database that brings together harmonised statistics on earnings distributions and earnings dynamics derived from administrative register data in different countries. With the latest update, the database expands from 12 to 26 countries.
The Finnish GRID statistics were produced by Tuuli Paukkeri from VATT, Terhi Ravaska from Tampere University and VATT, and Pengpeng Xiao from Duke University. Paukkeri and Ravaska are also members of the Finnish Centre of Excellence in Tax Systems Research (FIT). The Finnish statistics were compiled from administrative register data maintained by Statistics Finland and cover the period 1987–2018.
GRID reveals what lies behind earnings inequality
Conventional measures of earnings inequality show how large the variation in people’s earnings is at a given point in time. However, they do not show what happens to individuals’ earnings over time. Earnings dynamics describe these changes: for example, how much people’s earnings fluctuate from year to year, how the risk of earnings losses changes over time, and how people move between different parts of the earnings distribution.
– The strength of GRID is that it allows us to examine changes in people’s earnings in addition to earnings inequality. The same level of earnings inequality can arise in very different societies: in one, people’s earnings may remain almost unchanged from year to year, while in another, people move much more across the earnings distribution and face greater earnings risks. GRID makes it possible to compare these differences across countries, says senior researcher Tuuli Paukkeri from VATT.
GRID enables comparisons across countries
International comparisons of earnings dynamics require statistics from different countries to be produced in a comparable way. In GRID, statistics are constructed from administrative register data in different countries using common definitions and methods.
The database can be used, for example, to examine how earnings dynamics differ by age and gender, how earnings mobility develops over the life cycle, and how earnings volatility changes over the business cycle.
– Finland’s administrative register data, which cover a long time period, provide a good basis for examining earnings and earnings dynamics, as the same individuals can be followed from year to year and changes in their earnings can be observed over time. When measures are constructed from the data using harmonised methods across countries, we not only gain a better understanding of developments in Finland but can also see where Finland resembles, for example, other Nordic countries and where the Finnish experience stands out, says assistant professor Terhi Ravaska from Tampere University.
Explore the GRID database
The GRID database is openly available online. The data can be downloaded for further analysis, and the visualisation tool can be used to create charts directly from the data and compare developments across countries.
Study
A working paper based on the Finnish GRID data examines the evolution of earnings inequality and earnings dynamics in Finland between 1987 and 2018, as well as differences in these developments across regions and industries. The paper is forthcoming in the Journal of Macroeconomics.
Further information:
Senior researcher Tuuli Paukkeri, VATT
tuuli.paukkeri@vatt.fi
+358 295 519411
