On the Importance of Finnishing School: Half a Century of Inter-Generational Economic Mobility in Finland

Trends in inter-generational economic mobility in Finland are analyzed using panel data from 1950 through 1999 on more than 200 thousand sons and daughters born between 1930 and 1970. A significant decline is estimated in the inter-generational transmission elasticity from the 1930 birth cohort until the baby boom cohorts of the early1950s. After that we observe no increase in the extent of mobility for 1950s and 1960s birth cohorts. The result holds both for sons and daughters. The quite dramatic transformation of the Finnish economy in the second half of the twentieth century is outlined in the paper. However, a decomposition of the inter-generational transmission elasticities across cohorts shows that most of the decline in transmission reflected a reduction in the impact of family income on duration of children’s education accompanied by a decline in the returns to schooling. Despite the large volume of rural–urban migration during this period of transformation, regional mobility played only a minor role in increasing economic mobility.