The Nordics Have Low Inequality Mostly Because of Welfare

The Nordic countries have far less economic inequality than the United States. Most of the difference is due to the Nordics’ welfare states.

In one part of a rather ambitious article in the Journal of Economic Literature’s September issue, Norwegian economists Magne Mogstad, Kjell Salvanes, and Gaute Torsvik attempt to identify the causes of the relative income equality enjoyed by Nordic countries compared to other developed economies. Sadly, over the couple of months since the article was published, this bit of their research has been taken up by advocates of predistribution over redistribution as proof welfare programs are less effective weapons in the fight against income inequality.

The authors aren’t totally blameless of course. One of their paper’s key findings, they wrote, is “tha