Regional Income Differences in Finland, 1966-96

Household Survey data is used to study income differences between and within regions in Finland during 1966-1996. We have five major (NUTS2) regions and apply four income concepts: factor income, gross income, disposable income and final income, and consider how per capita incomes have evolved regionally relative to the respective national averages. There has been regional convergence especially in disposable and final income per capita. Regional Gini-coefficients based on respective income concepts, both per capita and per Atkinson?s equivalent unit, indicate that there are no big differences in income inequality across regions. Although inequality has increased over time when factor income is considered, it has remained much the same in case of disposable income and final income, until an increase occurs in mid-1990s, after the deep depression years in Finland. We also study how changes in earned and unearned income, direct taxes and transfers, affect income inequality.