If Seebohm Rowntree had studied Sweden – how poverty changed in the city of Göteborg from 1925 to 2003

Abstract

This paper investigates the development of poverty in Sweden using micro data derived from tax files for the city of Göteborg for the years 1925, 1936, 1947 and 1958, as well as more recent (1983, 1994 and 2003) information. We define poverty as living in a household with a disposable income lower than a poverty line that represents a constant purchasing power all years, as well as poverty lines defined as 60% of contemporary median income. Clear reductions of poverty from 1925 to 1947, as well as from 1958 to 1983, are found. We argue that an important poverty-reducing mechanism during both periods was narrowing earnings disparities. Further, we claim that the poverty reduction from the end of the 1950s to the first half of the 1980s was the outcome of improved transfer systems as well as the establishment of pronounced characteristics of present-day Sweden: the dual earner system.

Keywords:

• Gothenburg
• household
• poverty
• poverty line
• Seebohm Rowntree
• Sweden

Acknowledgements

This research was supported by a grant from the Swedish Council for Work Life and Social Research (FAS). Earlier versions of this paper were presented at seminars at the Department of Economic History, University of Gothenburg, the European Social Science History Conference, 26 February–1 March 2008, Lisbon and INF-SOFI Workshop on topics in income distribution, Stockholm May 2008. We are grateful for comments received on those occasions as well as for comments from referees to this journal.

Notes

1. Eurostat, (2008) “Income Poverty and Social Exclusion in the EU 25”, Statistics in Focus, Organisation of Economic Cooperation and Development (2008), Growing Unequal? Income Distribution and Poverty in OECD Countries, Paris, Luxembourg Income Study (2009) http://www.lisproject.org/keyfigures/

2. United Nations Development Program Human Development Report 2007/2008, (New York, 2007)

3. The most commonly used measure of the extent of poverty is the poverty rate (the proportion of the population deemed as poor) while the profile of poverty expresses how poverty varies in the population (for example how poverty rates varies by population groups).

4. On previous assessments of income poverty in Sweden see B. Gustafsson and P.J. Pedersen, Poverty and Low Income in the Nordic Countries. (Ashgate Publishing, 2000) and B. Gustafsson et al., ‘Financial Poverty’, International Journal of Social Welfare 16 (2007): 67–90. There are also several assessments of poverty in Sweden using the consensus approach, see B. Halleröd, ‘Making Ends Meet – Perceptions of Poverty in Sweden’, Scandinavian Journal of Social Welfare 4, no. 3 (1995): 174–189; B. Halleröd, “Sour Grapes: Relative Deprivation, Adaptive Preferences and the Measurement of Poverty”, Journal of Social Policy 35, no. 3 (2006): 371–390 as well as B.Halleröd, D. Larsson, and D. Gordon, ‘Relative Deprivation: a Comparative Analysis of Britain, Finland and Sweden’, Journal of European Social Policy 16, no. 4 (2006): 328–345 and B. Halleröd and D. Larsson, ‘Poverty, Welfare Problems and Social Exclusion’, International Journal of Social Welfare 17 no. 1 (2008): 15–25.

5. Data on poverty from four years does not allow us to use an econometric / statistical approach, which has been used in recent research on poverty in contemporary societies. For such studies see for example S. Moller, D. Bradley, E. Huber, and F. Nielsen, “Determinants of Relative Poverty in Advanced Capitalist Democracies”, American Sociological Review, 68 (2003): 22–51, D. Brady, “The Welfare State and Relative Poverty in Rich Western Democracies, 1967–1997”, Social Forces, 84 (2005): 1329–1364, and O. Bäckman, ”Institutions, Structures and Poverty – A Comparative Study of 16 Countries, 1980–2000”, European Sociological Review, 25, no. 2 (2009): 251–264.

6. See for example A.B. Atkinson, and T. Piketty, eds., ‘Top Incomes over the 20 ^th Century. A Contrast between Continental European and English-Speaking Countries’, (Oxford: Oxford University Press, 2007).

7. Rowntree, S. (1901) “Poverty – Study of Town Llife.” London, McMillan and Co. This book is generally regarded as the first study that used micro data and a poverty line to quantify the extend and profile of poverty. For a biography of Seebohm Rowntree see Briggs, A. (1961) A Study of the Work of Seebohm Rowntree, 1871-1954 : Social thought and social action, (London, Longmans. 1961).

8. Rowntree, S. and Lavers, G. R. (1951) Poverty and the Welfare State. (London, Longmans, Green and Co., 1951).

9. One exception is Piachaud, D. (1988) ‘Poverty in Britain 1889 to 1983’, in Journal of Social Policy 17 (3): 335–349. (1988) who assess how poverty in Britain changed from Rowntree's first work until 1983. For the United States see Ross, C., Danziger, S., Smolensky, E. (1987) ‘The Level and Trend of Poverty in the United States, 1939–1979‘ Demography 24 (4): 587–600 who investigated poverty from 1939 to 1979.

10. See Citro, C. F. and Michael, R. T. (eds) (1995) Measuring Poverty. A New Approach. Washington D C, National Academy Press for a detailed discussion as well as for suggestions for improved measurement.

11. See for example A. Atkinson et al., Social Indicators. The EU and Social Inclusion. (Oxford: Oxford University Press, 2002).

12. For the concept “Pro-poor growth” see for example Ravalion, M. and Chen, S. (2003) “Measuring Pro-Poor Growth”, Economic Letters, 78, 93–9 and Essama-Nssah, B. and Lambert, P. (2009) “Measuring Pro-Poorness: A Unified Approach”, Review of Income and Wealth, 55 (3), 752–758.

13. For a now classic theoretical debate on to what extent poverty in rich countries should be conceptualised as being only relative or not, see Sen, A. (1983) “Poor, Relatively Speaking”, Oxford Economic Papers, 35, 153–169, Townsend, P. (1985) “A Sociological Approach to the Measurement of Poverty – A Rejoinder to Professor Amartya Sen”, Oxford Economic Papers, 37, 659–668 and Sen, A. (1985) “A Sociological Approach to the Measurement of Poverty: A Reply to Professor Peter Townsend, Oxford Economic Papers, 37, 669–676.

14. See for example Krantz, O. (2002)”Svensk ekonomi under 1900-talet: en omväxlande historia.” in Andersson, L. and Krantz, O. (red.) Omvandlingens sekel: perspektiv på ekonomi och samhälle i 1900-talets Sverige. Lund. Studentlitteratur. Schön, L. (2007) En modern svensk ekonomisk historia: tillväxt och omvandling under två sekel. (kap. 4, 5 och 6) Stockholm. SNS förlag. Magnusson, L. (2002) Sveriges ekonomiska historia.(del III och IV) Stockholm Prisma. For the development of the unemployment rates see Axelsson, R. Löfgren, K-G. and Nilsson, L-G. (1983) Den svenska arbetsmarknadspolitiken under 1900-talet. Stockholm, Bokförlaget Prisma. p. 119, figur 6.3.

15. See Olsson K. (1972) Hushållsinkomst, inkomstfördelning och försörjningsbörda. En undersökning av vissa yrkesgrupper i Göteborg 1919–1960. Meddelande från Ekonomisk-Historiska institutionen. Göteborgs Universitet., Hibbs, D. (1991) ‘Wage Dispersion and Trade Union Action in Sweden’ in Person, I. (ed) Generating Equality in the Welfare State. The Swedish Experience”, Norwegian University Press, Edin, P-A. and Holmlund, B. (1996) “The Swedish Wage Structure: The Rise and Fall of the Solidary Wage Policy?”, in Freeman, R. and Kats, L. (eds.) Differences and Changes in Wage Structures. Chicago, University of Chicago Press, Gustafsson. B, and Johansson, M. (1998) “Earnings Inequality and the Gender Gap: An Accounting Exercise for Sweden 1975–1991”, Labour, 12, 715–744., Gustavsson, M. (2006) “The Evolution of the Swedish Wage Structure: New Evidence for 1992–2001”, Applied Economics, 13, 279–286. Fredriksson. P. and Topel, R. (2006). “Förändrade förutsättningar för svensk lönebildning in Freeman, R. B., Swedenborg, B., Topel, R. (ed) Att reformera välfärdsstaten. Amerikanskt perspektiv på den svenska modellen. NBER Rapporten II, (Stockholm, SNS förlag, 2006).

16. Hort, S. E. O. (1993) Social policy and welfare state in Sweden. Lund studies of social welfare 3. Lund, Arkiv, Lundberg, U. and Åmark, K. (2005) Hundra år av välfärdspolitik. Välfärdsstatens framväxt i Norge och Sverige. Umeå, Boréa. and Edebalk, P. G. (1996) Välfärdsstaten träder fram. Svensk socialförsäkring 1884–1955. Lund studies of social welfare XII, (Ystad, Arkiv förlag, 1996).

17. For a description of the development of unemployment insurance see N. Edling, “Limited Universalism: Unemployment insurance in Northern Europe 1900–2000.” in The Nordic Model of Welfare. A Historical Reappraisal, N.F. Christiansen, et al. (University of Copenhagen. Museum Tusculanum Press, 2006).

18. The proportions are from the Censuses see Stanfors, M. (2003) Education, Labour Force Participation and Changing Fertility Patterns. A Study of Women and Socioeconomic Change in Twentieth Century Sweden. Lund Studies in Economic History 22. On the gender wage gap see for example Svensson, L. (1995) Closing the Gender Gap. Determinants of the Change in the Female-to-Male Blue-collar Wage Ratio in Swedish Manufacturing 1913–1990. Lund: Skrifter utgivna av Ekonomisk-historiska föreningen i Lund Vol. LXXI. and Johansson. M., Katz, K. and Nyman, H. (2005) ‘Wage Differentials and Gender Discrimination - Changes in Sweden 1981-98” Acta Sociologica 48 (4): 341–364. Axelsson, C. (1992) Hemmanfrun som försvann. Övergången till lönearbete bland gifta kvinnor i Sverige 1968–1981, Stockholm: Stockholms Universitet, Institutet för social forskning avhandlingsserie 21. P. 108 reports statistics on married women's economic dependence for selected years.

19. K. Åmark, (2006) “ Women's Labour Force Participation in the Nordic Countries During the Twentieth Century.” in Christiansen, N. F., Petersen, K., Edling, N. and Haave, P. ed. (2006) a.a. Åmark, K. (2002) “Familj, försörjning och livslopp under 1900-talet.” in Bergman, H., Johansson, P. (red.) Familjeangelägenheter. Modern historisk forskning om välfärdsstat, genus och politik. Stockholm/Stehag, Brutus Östlings bokförlag Symposion. Stanfors M. (2007) Mellan arbete och familj. Ett dilemma för kvinnor i 1900-talets Sverige. (Stockholm. SNS förlag, 2007).

20. On research on the transition from education to working life see for example Ryan, P. (2001)“The School to Work Transition: A Cross-National Perspective”, Journal of Economic Literature, 39, pp. 34–92. For studies on financial transfers across households in Sweden see Fritzell, J. Lennartsson, C. (2005) “Financial Transfers between Generations in Sweden” Ageing and Society, 25, 1–18 as well as Björnberg, U. and Latta, M. (2007) “The Roles of the Family and the Welfare State. The Relationship between Public and Private Financial Support in Sweden.” in Current Sociology 55, no. 3(2007): 415–45.

21. See for example Gustafsson, B. and Zheng, J. (2006)”Earnings of Immigrants in Sweden from 1978 to 1999”, International Migration, 44, pp. 79–117 and references quoted there and Carlsson, M. and Rooth, D. (2007) “Evidence of Ethnic Discrimination in the Swedish Labour Market Using Experimental Data”, Labour Economics, 14, pp. 716–729. On poverty among immigrants see Blume, K., Gustafsson, B., Pedersen, P.J. and Verner, M. (2007) “At the Lower End of the Table: Determinants of poverty among Immigrants to Denmark and Sweden, Journal of Ethnic and Migration Studies, 33, pp. 373–96.

22. The book by Olsson, K. (1996) Göteborgs historia: Näringsliv och samhällsutveckling 3. Från industristad till tjänstestad 1920–1995. Stockholm. Nerenius & Santérus förlag, provides a thorough and highly readable description of the economic and social development of the city for the same period as here studied.

23. For a more thorough description of the database see Gustafsson, B. and Johansson, M. (2003) ‘Steps toward equality. How and why Income inequality in urban Sweden changed during the period 1925–1958.’ in European Review of Economic History 7, 191–211 who also report Gini coefficients computed from the data. The database is also used by Gustafsson, B. and Jansson, B. (2008) “Top Incomes in Sweden over Three-Quarters of a Century: A Micro data Approach”, Cambridge Journal of Economics, 32, (6), pp. 963–976 to investigate the evolution of top incomes.

24. When deriving results for the entire population of Göteborg we correct for the different probabilities of being included by taking a 10-percent sample of the foreign-born sample. We faced the problem in the 1983 data that no children born 1979 to 1983 and their parents were found. Thus, our results from 1983 should be considered as more preliminary than the results for other years.

25. HINK/HEK excludes persons living in institutions, those who have immigrated or emigrated during the year and some others, a procedure that probably leads to lower poverty counts. Around 30% of respondents to HINK/HEK do not answer due do various reasons. In order to correct for this, Statistics Sweden has developed sample weights which we also apply in our tabulations. In contrast, by being register based, SWIP does not face problems of non-response.

26. Inspecting tables show that estimates of size of fraction of persons living in the Göteborg region that fall under a poverty line set to 60% of contemporary median income in Sweden are rather close to estimates for Sweden as a whole. In 2003, 8.6% of persons living in the Göteborg region fell under the 60-percent line while the poverty rate for the country as a whole was 9.1%. The 1995 rates were 5.9% (Göteborg) and 6.5% (Sweden as a whole).

27. See for example Atkinson, A. et al, (2002) pp. 98–99

28. http://www.lisproject.org/

29. Given than the 1983 estimate is based on SWIP, a source for the same year producing higher poverty rates than HINK/HEK, the recorded drop in poverty rate is most probably an underestimate rather than an overestimate.

30. Following many before us, we update the poverty line by the Consumer Price Index, which is available for the entire period and which is computed for average consumption. It can be debated, however, how well this represents the consumer prices met by people with low incomes.

31. We here use poverty rates calculated from HINK/HEK 2003. Poverty rates for the same year calculated from the SWIP subsample is considerably higher due to, for example, the definition of the household. In this section we find more confidence in poverty rates calculated from HINK/HEK.

32. See for example Wong, Y.L.I., Garfinkel, I., and McLanahan, S. (1993) “Single-Mother Families in 8 Countries – Economic-Status and Social Policy.” Social Service Review 67 (2): pp. 177–97.

33. In this data is occupations classified in a scheme with different levels, where the lowest has around 1 000 categories. We merge the 13 categories that were used in the Census of 1985 into the categories “Unskilled worker”, “Skilled worker”, “White collar”, “Higher employees”, “Self-employed” and “Information missing”.

34. Please note that in the specification we also include a dummy variable indicating lack of information on socioeconomic status / education of the household head. In all cases such coefficients indicate considerably higher poverty risks than the status low-skilled worker /low-educated.

35. See note 24 for the motivation for not presenting predictions for 1983.

36. Note that the development of poverty in Göteborg as a whole is also based on changed population composition. For example, the proportion of low-skilled families decreased during most of the period studied.

37. Rowntree, S. (1941) “Poverty and Progress. A Second Social survey of York.” (London: Longmans, Green and Co., 1941).