Men’s and women’s income levels in Finland

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In this blog post, we examine differences in men’s and women’s income levels in Finland. Our discussion is mostly based on a recent small study by Kaisa-Mari Okkonen of Statistics Finland. But we also use other sources.

Thus far we have published a number of blogs about salaries in Finland. In them, we’ve also discussed wage gaps between women and men in Finland. Salaries, however, are not the only form of income a person can have. Other forms are, for example, pensions, investment income, and different types of governmental assistance. 

In this blog, we’ll talk about differences in net incomes rather than salaries. The term net income here refers to the above types of income after taxes. 

A little background on the study of men’s and women’s income levels in Finland

In her blog post, Okkonen looks at the placement of men and women along the Finnish net income distribution scale. 

In her study, Okkonen ranked the Finnish resident population over the age of 18 based on their personal annual net income. The total size of this population is 4 363 000 individuals. On one end of the scale are those with the lowest net income. On the other are those with the highest net income. 

Then, she divided this ordered population into 20 equally sized groups. Each group contains 5 % of the population. Each of these groups contained about 218 000 individuals. 

She then examined how men and women are distributed between these net income groups. 

In the following, we highlight some of her findings.

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Men’s and women’s income levels in Finland at different ages

Women in Finland start their adulthood with slightly larger annual net incomes than men of the same age. Mira Kanjantie has suggested that this is because men are engaged in military or alternative service at this age. Thus they don’t earn much at this point in their lives. 

By age 22, however, men’s annual net income overtakes that of women. From there on, men’s annual net income is larger than women’s in all age groups. 

Overall, the difference in the median annual net income of men and women was 16 % in favor of men in 2019. A large contributing factor to this difference is the gender segregation of the Finnish labor market. We’ve discussed this in a number of our blogs

The median annual net income of adult women in Finland was 20 920 € in 2019. For men, it was 24 910 €. 

The difference between men’s and women’s income levels is the largest among the 65-77 year-olds. Among them, women’s annual net income was about 25 % lower than men’s. 

Among men, those with the highest annual net income were those born in 1975. They were 44 years of age in 2019. Among women, those with the highest annual net income were born in 1976.

Men and women dominate at different parts of the income distribution scale

For the most part, women dominate in the lower and middle parts of the income distribution scale. The only exception to this is the very lowest net income group. In that group, there are more men than women. 

In this group, the net annual income was 6 640 € at most in 2019. They were mostly (53 %) aged between 18 and 24. 31 % were 18-19 year-olds. Many of those belonging to this group still live at home with their parents. And many of the men are in military or alternative service as we already point out. 

In the next 13 groups of the income distribution scale, women dominate. Men, in turn, dominate the 6 highest net income groups. 

Men’s relative dominance against women grows the higher up in this part of the income distribution scale we move. In total, women make about 36 % of those with the highest annual net incomes. But they make only about25 % of those in the last net income bracket, the highest 5 %.

Women among the high earners in Finland

Terhi Ravaska published an article in 2018 in which she examined women at the top of the income distribution scale in 1995-2012. 

She found that in the top 10 %, for both women and men the majority of their pre-tax income comes from wage or salary earnings. However, for the top 1 %, the share of salary/wage income goes down. Instead, entrepreneurship earnings and investment income are increasingly important. 

Within the top 0.1 %, salary/wage income forms a larger part of pre-tax income for men than it does for women. For women in that income group, income from entrepreneurship forms a larger share of income than for men. Investment income is an important income source for both. 

The importance of salary as a source of income for the highest earners also explains why there are fewer women in that group. Again, a lot of it boils down to gender segregation of the labor market. There simply are fewer women working in fields and positions that would yield high enough salaries to raise them to the top income group. Their overall lower earnings during their lifetimes also render them less likely to be able to make investments that would place them in that group. 

Mira Kajantie examined pre-tax income differences between women and men in another Statistics Finland blog. Her figures clearly show how men’s salary earnings develop at a steeper rate than women’s around the time when people usually have children. 

Larger earnings for men at this stage also implicate larger earnings later in life. Both in the form of investment earnings and as higher pensions. 

In general, all age categories combined, investment income accounts for 11 % of pre-tax income for men. For women, investment income accounts for about 5 %. 

So far we’ve looked at how men’s and women’s net income place them at different parts of the income distribution scale. We’ve also established that those earning the most and the least are men. But what does being a high earner mean in Finland?

The meaning of rich and wealthy in Finland

Those who are at the top of the income distribution scale in a country are referred to as being rich. They can be the top 10 % or the top 1 % depending on the definition. This is what that means in Finland.

In 2018, those who earned more than 56 000 €/year as taxable income made it into the top 10 % in Finland. About 2 % of taxpayers in Finland earned more than 100 000 €/year in taxable income in 2018. 

Taking into account the size of the household a person is living in an annual net income of 44 000 € made a person rich in Finland in 2018. With an annual net income of 91 000, one made it into the top 1 % in Finland in 2018. On average, the top 1 % of Finnish taxpayers made 3.6 more in income than the median income earner. 

The average annual net income among the top 1 % in Finland was 188 467 € in 2018.

If we, in turn, talk about wealth rather than net income, the top 10 % in Finland owned at least 485 000 € in 2016. They owned 47 % of all wealth in Finland in 2016.

The median household wealth in Finland was 107 00 € in 2016. 

Learning about Finland

If you like our blogs and would like to learn more about working and living in Finland, check out our self-guided online courses for more information. We have a course that’s a great introductory course to all things Finnish. We also have a fun course about Finnish nature and the foods it has to offer

Those of you who want to make sure that they know the rules of Finnish employment relationships should check out our thorough Working in Finland course. 

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