Generous social benefits aren’t enough to change the life prospects of kids from low-income families.

Nordic nations are proud of their social policies—justifiably so. As we know, high taxes fund social security, education, disability, housing and unemployment benefits that reduce inequality and increase social mobility.

Securing the well-being of children is a key element of what is called the Nordic Model. Programs like subsidized daycare, tuition-free college education and generous educational support are supposed to eliminate social class differences based on social class. If the strategy works, every child is assured of an equal chance to succeed and social class differences across generations are wiped out.  (Indeed, it’s almost verboten to talk about social class.)

This safety net is the envy of liberals is less generous nations—myself included. It explains why researchers have highlighted Nordic nations generally, and Finland in particular, as the happiest nations in the world.
But a just-published study, co-authored by Nobel Prize-winning economist James Heckman and Rasmus Landerso, complicates this storyline.

The study focuses on Denmark, the epitome of the Nordic Model, where there are low levels of income inequality and high levels of income mobility across generations—even more striking than in Finland.

Still, despite ample public support for children, families and neighborhoods exercise a decisive influence on their futures.

Denmark has not levelled the intergenerational playing field by building children’s skills across generations or by doing a bang-up job of promoting their human potential. As the research shows, it has done so through government largesse, in the form of Robin Hood tax and transfer programs.

What is especially startling, the impact of the family on children’s future is as powerful as in the United States, with its tattered safety net. In Denmark, but not the U.S., the welfare state expanded dramatically in the past half-century. Nonetheless, the same fundamental inequalities persist in educational outcomes.

The reverberations are intergenerational—the children of less well-educated parents are likely to be far less well educated than their middle-class peers.

While Heckman’s study draws on evidence from Denmark, there is nothing Danish about it. This is a story about the Nordic Model. Indeed, the impact of family and neighborhood on the lives of children is likely to be bigger in Finland, since the income gap is greater here.

If you have any doubt, have a look at the family background of University of Helsinki undergraduates. How many sons and daughters of poor families and immigrant families do you anticipate finding there?

What’s the explanation? In a word, families.

Higher education is the gateway to well-paying, knowledge-worker careers. Here’s where social class influence is most apparent—whether Danish youngsters earn a university degree is closely linked to their parents’ education. Among children born in 1985, a decade after the raft of youth-friendly policies took effect in Denmark, youth whose fathers had less than a high school diploma had a 20% shot of graduating. Those whose fathers graduated from high school had a 30% chance.

Here’s the kicker—the chances of receiving a university diploma were twice as good for those whose fathers were college graduates. Sixty percent of them received a degree. Equally surprising—and equally depressing, for those of us who regard true social mobility as critical to the wellbeing of any society—this graduation gap actually widened after the child-focused policies were introduced.

What’s going on? College-educated parents have learned how to stimulate their toddlers’ learning. They set examples for their kids to emulate, including supporting and supplementing what is happening in school. They nudge them in the direction of higher education.

These parents also choose to live in communities where most of their neighbours also have college degrees. That’s intentional—university-educated parents are especially likely to move to these highly educated, well-to-do neighborhoods after their first child is born. By the time she or he reaches school age, the average household income in neighborhoods where mothers have a university degree is around 30% above the national average.

These decisions about where to live exert an obvious influence on their children’s lives. Youngsters learn from their peers, and kids whose parents have earned a university degree are likely to have absorbed their parents’ attitude about the value of education. As well, the researchers found that the teachers in these communities, although paid no more than every Danish teacher, had a better track record in the classroom.

It’s the “Matthew Effect” in action—as the New Testament avers, “to those who have more is given.” In modern parlance, that’s “the more, the more.”

Let me be clear—I wouldn’t consider swapping the Nordic Model for the American sink-or-swim approach. However, simply maintaining the status quo cannot secure equal opportunity for all children.

There are promising strategies to lessen the inequalities for low-income and immigrant students, and I’ll be writing about them in future columns. The first step is to recognize that Finland’s generous, universally available provision of social services will not eliminate inequality in many important life outcomes—not only for this generation but for their children as well.

David Kirp

David Kirp, professor of public policy at the University of California at Berkeley, is a contributing writer to the Helsinki Times.